Gavin Hinks, Accountancy Age editor
This fear, not entirely irrational, has come about because of the depressing
inability of businesses to access credit in the current climate can’t get
credit, can’t continue. Well, that’s the assumption regulators have been trying
to head off. So reports last week that the FSA was meeting with auditors to
discuss the implications of a qualified audit opinion on a bank should come as
Except, the implication the FSA is terrified that an auditor will cast doubt
publicly on the going concern prospects of a bank seems to be misplaced.
The reasons for this is that the Big Four know full well that they would
never issue a qualified opinion because it would instantly kill the bank
concerned. Just before Christmas auditors asked for a meeting with City minister
Lord Myners to reassure themselves that government had a procedure in place to
deal with a bank in trouble should their audit reveal troubles.
The point about this was that the auditors wanted to head off the possibility
a going concern statement. A Big Four source, close to those at the meeting,
said: ‘A going concern statement is possible theoretically, in practice it would
What the auditor would do, once aware of a looming crisis, would be to
immediately take themselves off to either the FSA or the Treasury, hand over the
evidence and trigger a rescue effort before a run on the bank. The trick would
be keeping such action out of the press.
Gavin Hinks is editor of Accountancy Age