A blog by Martin Williams, external affairs spokesman of Graydon UK, focusing on business risks - from fraud to late payment. Martin has has spent the last 35 years in the credit information industry, and has been with Graydon UK, one of the top five commercial credit agencies in the UK, for the last 20. Apart from his PR duties, he teaches credit analysis to risk professionals and helps educate SMEs on the importance of maintaining a good credit rating. Martin is a Fellow of the Institute of Credit Management and is a sitting member of the Institute's Think Tank. He was also honoured by Credit Today, after being included on their Credit 100 list of people who have had the greatest impact in the credit industry during 2008, 2009 and 2010.
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02 Oct 2009
I was talking to senior executives at the ACCA yesterday, and hearing of complaints about the credit industry from accountancy firms on behalf of their disgruntled clients. it appears that the increasing number of going concern statements in audited accounts containing references to "material uncertainties" about future trading aren't going down too well with credit grantors. The argument goes that many credit managers are reading these going concern statements, often talking about the difficult economic backdrop, impact on cash flow etc as and treating them as seriously as Auditors qualifications.
As these going concern statements are becoming commonplace in statutory accounts being filed at companies house as the recession continues, the attitude of credit grantors towards these statements will become even more important: the more negative the approach, the more difficult it will be for companies to claw their way out of recession.
No one , including directors of businesses or accountants, want to attach their names and reputations to incorrect or false statements in audited accounts, but if they tell the straightforward truth i.e. it's bloody tough out there and yes, there are uncertainties about the future which we acknowledge, will the credit industry take the dimmest view of this honesty and penalise companies too harshly?
I'd be interested to hear some accountants' views on this.
Visitor comments
"When each of the notorious “financial crisis” institutions collapsed, were bailed out/nationalized by their governments or were acquired/rescued by “healthier” institutions, they were all carrying in their wallets non-qualified, clean opinions on their financial statements from their auditors. In none of the cases had the auditors warned shareholders and the markets that there was “ a substantial doubt about the company’s ability to continue as a going concern for a reasonable period of time, not to exceed one year beyond the date of the financial statements being audited.”"
An excerpt from my latest blog post on the subject.
http://retheauditors.com
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