Auditors going concern to extend beyond 12 months

[chinweike]

The Financial Reporting Council (FRC) recently made a call for auditors going concern period to extend beyond 12 months. This has generated some low level debates amongst professional accountants, I personally think it will place more strain on the resources of auditors but will serve as a wake up call to the profession as a whole.

What is your opinion on this? You can also take part in the poll

Thanks for sharing your thoughts.

 

[cmesh]

Theoretically it makes sense, but practically it get's difficult. There's already a significant amount of judgment involved in determining whether an entity will make it for another 12 months. Can't imagine the conversations between management and auditors if they had to argue about what would happen 23 months from the balance sheet date...

 

[Fidget]

On the other hand, the most strain might be on businesses rather than auditors because the onus is on the business to demonstrate its viability as a going concern. Auditors just tick that box in the absence of anything to suggest otherwise, which, to be fair, they can only glean from the accounts/processes they're auditing at the time.

 

[Counterofbeans]

theoretically it makes sense, but practically it get's difficult. There's already a significant amount of judgment involved in determining whether an entity will make it for another 12 months. Can't imagine the conversations between management and auditors if they had to argue about what would happen 23 months from the balance sheet date...

THIS...

Investors want to put more onus on everyone else other than themselves in an effort to reduce their own risk...

 

[The Finance Writer]

THIS...

Investors want to put more onus on everyone else other than themselves in an effort to reduce their own risk...

As someone who learned accounting strictly for the purpose of conducting work as an investment analyst, I can honestly say that Counterofbeans is absolutely correct. Just give us audited financial statements that make sense and we investors should take the risk of interpreting them.

 

[cmesh]

As someone who learned accounting strictly for the purpose of conducting work as an investment analyst, I can honestly say that Counterofbeans is absolutely correct. Just give us audited financial statements that make sense and we investors should take the risk of interpreting them.

Couldn't agree more with you and Counterofbeans...