RegulationRegulatory BodiesRegulator launches ‘going concern’ review

Regulator launches 'going concern' review

FRC reveals going concern remains a 'critical' issue even as the economy stabilises

AN INQUIRY has been launched into the use of ‘going concern’ judgements during the crisis, the UK’s financial reporting regulator has announced.

Led by Lord Sharman, the former head of KPMG, the inquiry will look at the lessons to be learned from the experience of directors and auditors who have faced tough going concern questions during the credit crunch.

Financial Reporting Council chairman Baroness Hogg acknowledged that going concern continues to be a ‘critical’ issue despite guidance being issued by the regulator two years ago.

She said: “Although credit markets have since stabilised, going concern and liquidity risk continue to be critical corporate reporting and audit issues.

“In launching this inquiry, our aim is to ensure the lessons of the recent past are captured, our guidance developed as necessary and best practice in dealing with a range of related issues shared widely.”

It was in December 2008 when the FRC moved to avert what many expected to be a going concern crisis as the credit crunch took hold in the UK.

Fearing a swathe of negative going concern reports from auditors the FRC cautioned that companies did not require confirmation of credit lines to continue as going concerns.

Experts later debated whether going concern remained a relevant principle of business for companies.

Related Articles

FRC urged to fine Big Four firms penalties over £10m

Audit FRC urged to fine Big Four firms penalties over £10m

4w Alia Shoaib, Reporter
Ex-RSM Tenon CEO fined; ex-FD and PwC face complaints over its accounting

Accounting Standards Ex-RSM Tenon CEO fined; ex-FD and PwC face complaints over its accounting

1y Kevin Reed, Writer
Sports Direct implements FRC corrections in annual reporting

Accounting Standards Sports Direct implements FRC corrections in annual reporting

1y Stephanie Wix, Writer
CIIA appoints ex-FRC chief Paul Boyle as president

Company News CIIA appoints ex-FRC chief Paul Boyle as president

1y Stephanie Wix, Writer
FRC appoints former ICAEW president to its board

People Practice FRC appoints former ICAEW president to its board

1y Stephanie Wix, Writer
Watchdog launches audit investigation into Sports Direct

Accounting Firms Watchdog launches audit investigation into Sports Direct

1y Stephanie Wix, Writer
Record fine for Deloitte and audit partner over Aero misconduct

Accounting Standards Record fine for Deloitte and audit partner over Aero misconduct

1y Stephanie Wix, Writer
Cashflow statement improvements targeted by watchdog

Accounting Standards Cashflow statement improvements targeted by watchdog

1y Stephanie Wix, Writer