Annual reports face harsher auditor scrutiny

Companies will be under more pressure from auditors and have to provide greater evidence to show they have sufficient financing for their business activities in 2008 as a result of the liquidity crisis.

Auditors have warned they will apply extra scrutiny of a company's viability, including its access to credit for 2008 as a sign the credit crunch is spreading beyond the financial sector.

‘Many of the normal assumptions can't be taken for granted so while we always tested them, this year needs particularly high levels of challenges – we are in a new world,’ Martyn Jones, Deloitte UK national audit technical partner, told Financial Times.

Andrew Ratcliffe, PricewaterhouseCoopers audit partner, said the effects of the credit crunch went across the whole economy but no one yet knew how it would pan out. For auditors, this means a whole range of questions to be asked before approving annual reports and giving companies a clean bill of health.

Further reading:

Morgan Stanley reviews risk officer position

BDO: FDs uncertain in current credit crunch

Read story in the Financial Times