PracticeAuditKPMG audit chief: no compromise on going concern warnings

KPMG audit chief: no compromise on going concern warnings

KPMG will not compromise on 'going concern' warnings, says head of audit, despite auditors facing 'unprecedented' economic conditions

kpmg hq

The new head of KPMG’s
audit division, Oliver Tant, has said that the Big Four firm will not compromise
its stance on ‘going concern’ warnings, despite auditors facing ‘unprecedented’
economic conditions.

In November, the Financial
Reporting Council
urged auditors to only refer to going concern ‘when
appropriate’.

Going concerns refer to a ‘material uncertainty’ in the company’s accounts,
highlighting a possibility that the company may not be trading in a year’s time.

However, Tant said KPMG would not water down standards on such warnings. ‘We
are going to be just as rigorous on going concerns as before,’ he said,
supporting the FRC guidance.

‘My colleagues all know that it is an absolute priority.’

Auditors have come under fire recently for signing off banks’ accounts before
the credit crunch broke. In response, auditors have said they were not hired to
predict the future.

Tant said the audit profession was approaching a key period as companies and
investors looked to auditors for guidance.

‘Every time we sign an audit report our professional reputation is on the
line. In these difficult circumstances clearly our judgments are relied upon, we
know that this is the case and we do take our responsibilities very seriously.’

Tant, who was formerly KPMG’s global head of private equity and has been with
the firm for 25 years, said the economic crisis posed formidable challenges to
the accountancy profession.

‘We haven’t seen conditions like this both in terms of the prognosis for the
economy or the situation in the capital markets,’ he said. ‘Clearly, the clients
are facing circumstances which many of them have never experienced in living
memory.’

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