EY welcomes FRC re-think on going concern
6 November 2013
London 6 November 2013: EY welcomes the Financial Reporting Council (FRC) publication of its revised guidance on going concern.
Hywel Ball, UK Head of Assurance at EY, said: “On first reading, the latest FRC proposals seem to address earlier concerns. For example, we note with interest the FRC's idea to replace the current Code provision requiring listed companies to make a going concern statement, with an explanation of which principal risks, if any, have given rise to material uncertainties. This plays to one of the key recommendations made by Lord Sharman, to integrate the assessment of the company’s ability to continue as a going concern with its broader risk management processes.”
“Highlighting the issues that boards need to consider when assessing and managing risk, including risks to solvency and liquidity, has got to be a step in the right direction. We expect that investors and other stakeholders will appreciate this, including the proposal which encourages boards to explain how any significant failings or weaknesses in risk management and internal control are being addressed.
“But only time will tell whether this proposal, if implemented, results in lengthy or boilerplate disclosures. Such an occurrence would be a lost opportunity.”