Audit standard watchdog issues ‘going concern’ guidance

Growing anxiety over the use of ‘going concern’ statements has prompted
international audit experts to issue new advice in response to the ‘unexpected
severity, speed and consequences’ of the credit crisis.

The US-based International Auditing and Assurance Standards Board has issued
guidance on how auditors should assess whether clients are going concerns.

The IAASB said guidance is needed because the crisis means credit and
liquidity have made going concern a much more complex issue.

James Sylph, executive director at the IAASB, said: ‘While the alert notes
that auditors are always required to evaluate management’s use of the going
concern assumption, given current economic conditions, the evaluation will take
on even more importance and is likely to be more complex.’

‘This is particularly the case with regard to the availability of credit and
the impact of the current economic environment on budgets and forecasts, factors
which are likely to result in additional disclosures in the current period’s
financial statements.’

The IAASB issued guidance on ‘fair value’ accounting in October last year

Further reading:

Further reading:

IASB guidance on
going concern statements

Related reading

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