PwC red flags Northern Rock 'uncertainty'

by David Jetuah

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05 Aug 2008

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PricewaterhouseCoopers has raised concerns about Northern Rock's interim report disclosures, warning that there was no guarantee the bank will be able to continue as a going concern unless a key approval is secured from Europe.

The troubled bank's auditor did not qualify the bank's half-year numbers, but said there was a 'material uncertainty' hanging over Northern Rock because the government's £25bn bailout had not been endorsed by the European Commission.

'The going concern assumption is dependent on the European Commission approving financing facilities provided by the Bank of England and HM Treasury.This outstanding approval indicates the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern,' said PwC.

In reaching its conclusion, the firm found fault with disclosures made in it half-year report.

'The condensed financial statements do not include the adjustments that would result if the company was unable to continue as a going concern,' PwC added.

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