Company fears over FRC’s ‘going concern’ plan

Companies have expressed concern that extensive disclosures could unsettle
investors fololowing the
Fincance Reporting
’s proposal that directors should lay out clearly any significant
doubts over whether a business was a going concern.

‘We’re wary about rushing on such a key area,’ John Pierce,
Companies Alliance
chief executive, told the Financial Times. ‘We
are studying it to determine whether it means a change in substance or in form.

‘If substance, then it could have all sorts of unintended consequences and
perhaps precipitate the demise of a business that, without veiled warnings,
could pull through.’

Some experts question the need for a fourth category in the updated guidance.
‘They could just use the new tougher language and replace the middle one – it’s
not clear why a fourth one is needed,’ Steve Priddy of the
Association of Chartered
Certified Accountants
, said.

Further reading:

Companies urged to clarify risks of failure

the Financial Times story

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