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UK Audit Board Offers Going Concern Guidance

Global Glimpses | December 23, 2008

Britain's Auditing Practices Board has published guidance to help directors decide whether their business remains a going concern, given the tough economic climate.

The Board, which is part of the Financial Reporting Council, said uncertainty about bank lending intentions, the effect of recession on the company’s business, and the extent to which customers and suppliers might be suffering, caused problems for directors about to approve year-end financial results.

Under International Financial Reporting Standards, directors have to assess a company’s ability to continue as a going concern when preparing financial statements, and disclose any uncertainties they are aware of when making their assessment. The Board’s guidance also includes help for auditors, who have to decide whether the directors’ opinion is reasonable....

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