PracticeAuditInstitutes urge execs to deal with ‘going concern’ now

Institutes urge execs to deal with 'going concern' now

Business must face up to going concern potential in the financial statements, warn institutes

The heads of the top UK and Irish accounting institutes have warned directors
to face up to how they present their 2008 financial statements as soon as
possible, in light of a potential glut of going concern warnings from their
auditors.

With restricted access to borrowing facilities and the likelihood of
recession, business must now consider how to be as open and transparent as
possible about the risks they face going forwards, the heads wrote in a letter
to the
FT.

‘Even in those cases where directors conclude there are material
uncertainties that need to be disclosed, it does not mean the company concerned
will cease to be a going concern,’ the letter stated.

‘What is critical is that all those involved in the financial reporting chain
take the time to understand the nature of the uncertainties as well as the
proposed management response.

‘They should consult with their auditors as well as wider stakeholders early
in the process to ensure that everyone has time to deal with matters in a
considered fashion.’

The letter was signed by ICAEW chief executive Michael Izza, ACCA chief
executive Helen Brand, ICAS chief executive Anton Colella, Pat Costello of the
ICAI and CIMA chief executive Charles Tilley.

Further reading:

Read
the letter here

FRC moves to avert a going concern
‘crisis’

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