PracticeAuditWatchdog issues warning on internal controls

Watchdog issues warning on internal controls

FRC says economy is still a risk and audit committee must monitor carefully

The financial reporting watchdog has issued a warning to audit committees
asking them to be more vigilant over accounting policies and internal controls
in the wake of reworked business plans.

The Financial Reporting Council said that the next 12 months “are likely to
be particularly difficult for directors, trustees and management and increase
the risk that annual reports and accounts misreport facts and circumstances and
contain unidentified errors and omissions.”

Ian Wright, director of corporate reporting at the FRC, said: “Whilst there
are some positive economic signs we must be even more alert to the risk of error
and omission at this time given the risk of a rise in insolvencies over the next
few months.”

FRC is particularly concerned the effect that modifying terms of trade and
arrangements for pension funds may have on company accounts.

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