Directors will come under greater scrutiny as the FRC updates its guidance on the ‘going concern’ concept
Given the current economic climate, the Financial Reporting Council wants to ensure its guidance on how directors report on the ‘going concern’ principle is still robust enough to satisfy regulators and investors. As a result, it has published a consultation paper setting out proposals for its revision.
Currently, the Listing Rules of the Financial Services Authority require the annual reports of listed companies to include a statement by the directors on the going concern status of the company. But the regulator believes the guidance published in 1994 needs updating to keep in line with corporate reporting requirements and best practice.
Directors at present can reach three conclusions on a going concern:
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