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Going concern and financial reporting: Guidance for directors of listed companies registered in the UK was first published in 1994, shortly after the end of the recession in the early 1990’s. The guidance is referred to in Listing rule 9.8.6 of the Financial Services Authority and addresses the statement about going concern that must be made by directors of listed companies in their annual report and accounts. It recommends appropriate disclosure and describes the procedures that making an explicit statement entails. Exposure Draft: Going Concern and Liquidity Risk - Guidance for Directors of UK Companies An update for directors of listed companies; going concern and liquidity risk was published in November 2008. The update brings together the requirements on directors to comment on going concern and liquidity risk in annual reports and accounts, in the light of the significant economic difficulties that were being experienced in the latter half of 2008. The update addresses the requirements of International Financial Reporting Standards, UK Generally Accepted Accounting Principles, the Listing rules of the Financial Services Authority, the 1994 Guidance for directors, The Companies Act 2006 and its requirements about the content of a Business Review in relation to December 2008 year ends. The update may also be useful for directors of unlisted companies. Responses to Consultation Paper: Going Concern and Financial Reporting (September 2008)
Exposure Draft: Going Concern and Liquidity Risk - Guidance for Directors of UK Companies
In May 2009 the FRC published an Exposure Draft of updated guidance for directors of UK companies to assist them with their assessment of going concern and in evaluating the nature and extent of disclosures. The Draft will replace the Guidance for Directors that was issued in 1994. However, it will not replace that guidance until published in final form, taking account of the comments received.
An Update for directors of Listed Companies: Going Concern and Liquidity Risk (November 2008)
A consultation paper Going concern and financial reporting: proposals to revise the guidance for directors of listed companies was published at the start of September 2008. The purpose of the proposals was to update the guidance as a result of significant changes to accounting standards that have taken place since the original guidance was published in 1994.Consultation Paper: Going Concern and Financial Reporting (September 2008)
The FRC Study into going concern and liquidity risk was published in November 2008. The study examined the annual reports and accounts of thirty UK listed companies that had adopted the requirements of International Financial Reporting Standard 7 (Financial instruments: disclosure) for their December 2007 or March 2008 annual accounts. The study identifies opportunities for improvement by bringing together many of the disclosures about going concern and liquidity risk. The study also identifies a need for some companies to address better the IFRS 7 requirements to disclose how liquidity risk is managed in practice and to disclose the summarised data used by key management personnel in managing liquidity risk. Study: Going Concern and Liquidity Risk Disclosures (November 2008)
The FRC published Challenges for audit committees arising from current economic conditions in November 2008. The purpose of the document is to assist audit committees by identifying key questions that they may need to consider when preparing for December 2008 year end annual reports and accounts in the light of economic conditions present in the latter half of 2008. In addition to going concern and liquidity risk issues, the publication addresses year end planning, reliance on models for year end cash flow and valuation information and significant accounting and reporting judgments. The publication followed a similar document issued in December 2007 which addresses the difficulties then existing with a specific emphasis on financial services businesses. Challenges for Audit Committees arising from current economic conditions (November 2008)
The APB published Bulletin 2008/10 in December 2008. The purpose of the Bulletin is to assist auditors to respond to the challenges of the current economic conditions. It stresses that the current difficult economic conditions do not of themselves mean that a material uncertainty exists about an entity's ability to continue as a going concern or justify auditors modifying their auditor's reports to draw attention to going concern. APB Bulletin 2008/10 'Going Concern Issues During the Current Economic Conditions' (December 2008)
The FRC published in March 2009 a short update to help directors of smaller companies with their thinking in assessing going concern.
