PracticeAuditFRC issues special advice for credit crunch audits

FRC issues special advice for credit crunch audits

The credit crunch could make it harder for auditors to keep the necessary distance from their clients

The independence of auditors could be at risk, the Financial Reporting
Council has warned, if they are seen as being too close to their clients during
the credit crunch.

The warning comes in a report from the FRC and is the latest in a long line
of alerts drawing attention to the responsibility of auditors dealing with
businesses affected by the credit crunch and urging caution as they carry out
audits.

‘The so-called credit crunch may increase the risk of material misstatement
in the financial statements of some entities,’ Richard Fleck, APB chairman,
said.

‘This bulletin has been prepared to assist auditors in being alert to issues
relating to the availability of finance and the valuation of some assets for
balance sheet purposes and, thereby, to help them complete their current audits
with appropriate rigour.’

Further reading:

APB aims to speed up the audit process

No need for EU regulators’ guidance on subprime
turmoil

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