APB issues auditors new going concern guidance
Auditing Practices Board releases update for auditors on whether directors' statements on going concern are in line with FRC guidance
Audit watchdogs have rolled out new guidance for auditors on their going
concern responsibilities for listed companies.
As the credit crunch deepened,
auditors
have been embroiled in tough conversations with companies on the issue of
going concern warnings, which cast doubt on a company’s ability to carry on
trading for the following 12 months.
The Auditing Practices Board update clarifies auditors responsibilities in
reviewing a listed company’s statement as to whether the business is a going
concern and in reviewing corporate governance statements required by the FSA
under Disclosure and Transparency Rules.
The changes include auditors being called upon to ensure information in
separate corporate governance statements about internal control and risk
management systems detailing financial reporting processes and share capital
structures is consistent with the information in the annual accounts.
It comes after the FRC released fuller guidance earlier this year for
directors on going concern in response to the credit crisis.
“This new guidance for auditors clarifies their responsibilities in reviewing
whether the directors’ statements on going concern in their Annual Reports are
consistent with the FRC guidance for directors,” said Richard Fleck, chairman of
the APB.
Further reading:
APB
ramps up calls for ‘going concern’ perspective