APB audit warning.

PositionFirst in ...: : All the latest news affecting accountants in business, including regulations updates

Companies need to be alert to the knock-on effects from the international credit crunch on financial reporting in 2008. Preparers of financial statements should also be thinking about the possible impact on their own company.

While the direct effects of instability in the money markets are likely to continue to concern banks, a far wider range of organisations will find it tougher to secure funding and may face extra scrutiny from their auditors. Areas under particular scrutiny will include refinancing arrangements and the valuation and disclosure of financial instruments, according to a bulletin issued by the Auditing Practices Board (APB) last month.


It highlighted that one impact of the credit crunch could be to limit finance available to companies with, in extreme cases, potentially serious consequences in relation to the "going concern" assumption. The guidance identified some factors that may increase the risk of a material misstatement in financial statements. These include finance facilities due for renewal in the next year that have not yet been agreed; management that has no plans for alternative arrangements should current facilities not be extended; or a breach of any terms or covenants that could create a risk that the facilities are withdrawn or not renewed.

"It is particularly important that the directors' statement on going concern is not inconsistent with any...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT