Boards of struggling companies (and their auditors) must navigate choppy waters in terms of finalising their audited accounts in the midst of a global downturn.
By James Chesterman, Dominic Newcomb, Helena Potts, and David Cooper-Parry
The global downturn triggered by the COVID-19 pandemic continues to pose challenges to significant swathes of the worldwide economy. Companies across many industries and geographies have seen a precipitous decline in their operations and turnover.
Irrespective of liquidity positions, directors will also need to focus on whether they are able to publish “going concern” accounts and what their auditors’ opinion on those accounts will be. If directors can conclude a company is a going concern at the time of the audit, but harbour doubts about the future, this must be disclosed in the notes to the financial statements. This in turn can impact the basis on which both the accounts are published and the auditors’ opinion thereon prepared.