The purpose of the Bulletin is to provide guidance to auditors when forming opinions on directors’ disclosures in annual accounts on going concern and liquidity risk issues.

ICAI has already indicated that going concern and liquidity risk are key issues that will have to be addressed by Directors in the preparation of financial statements for 2008.

ICAI Director of Representation and Technical Policy, Aidan Lambe, said:

“The current economic climate and market turbulence pose some important challenges for all involved in the financial reporting process, company directors, audit committee members and auditors alike.  This APB Bulletin serves as a useful summary of various pieces of guidance in existence which are relevant to the consideration of going concern.  It is vital that investor confidence, which is already at a low ebb, is not further damaged by a lack of appreciation of the technical issues involved in the financial reporting and auditing processes. 

To this end, ICAI would advise that particular attention be paid to the discussion in the document on determining the implications for the auditor’s report.  So, whilst auditor are required by auditing standards to include an “emphasis of matter” paragraph in the audit report, where a material uncertainty exists that leads to a significant doubt about the ability of the entity to continue as a going concern, the Bulletin also notes that it should not be assumed that the general economic situation as at the present time in itself means that such a material uncertainty exists.”