UK watchdog wants to beef up ‘going-concern’ scrutiny
Collapse of HBOS, BHS and Carillion prompts Financial Reporting Council to propose revising its rules for stronger requirements for auditors
London — Accountants will have to be more exacting when deciding whether a firm can stay in business under a proposal by Britain’s audit watchdog after the collapses of Carillion and BHS. The Financial Reporting Council (FRC) proposed revising its rules on Monday so that auditors challenge a company’s own assessment of being a “going concern” more robustly. “The collapse of large companies such as HBOS, BHS and Carillion has brought into question why such companies had clean auditor’s opinions, which included no warnings that the companies were at risk of collapse,” the FRC said. Auditors would have to complete a stand-back requirement to consider all evidence obtained from a client’s management, whether corroborative or contradictory, when they draw conclusions on going concern. “Recent corporate failures and the FRC’s own enforcement work has shown the existing Going Concern Standard needs to be strengthened,” said Mike Suffield, the FRC’s acting executive director of audit. “Our ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.