FRC strengthens Going Concern audit standard

30 Sep 2019 12:47 PM

The Financial Reporting Council (FRC) has today issued a revised going concern standard in response to recent Enforcement cases and well-publicised corporate failures where the auditor’s report failed to highlight concerns about the prospects of entities which collapsed shortly after.

The revised standard (ISA UK 570 Going Concern) follows concerns about the quality and rigour of audit and increases the work auditors are required to do when assessing whether an entity is a going concern. It means UK auditors will follow significantly stronger requirements than those required by current international standards.

The FRC hopes that UK experience will lead to further strengthening of requirements at the international level.

The revised standard requires:

Stephen Haddrill, FRC Chief Executive, said: 

“High-quality audit protects the public interest, meets the needs of users of financial statements and underpins investor confidence.

“Recent corporate failures have, for good reason, adversely affected that confidence.

“Our own Enforcement work has demonstrated a need to strengthen existing Going Concern standards, which is a fundamental aspect of audit, so that investors can have confidence in audited financial statements and businesses’ financial prospects.”  

A copy of the revised standard can be found here.
A copy of the feedback statement can be found here.

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William BoyackCommunications Manager