UK: current economic conditions - challenges for audit committees

Yesterday the Financial Reporting Council published a document highlighting the challenges for audit committes arising from current economic conditions. The document contains questions which are designed to identify issues of relevance to the work of audit committees over the coming months. It also contains the following assessment:

The current economic outlook appears to be less depressed than this time last year. However, significant economic risks remain and will present challenges for many audit committees during the 2009/10 reporting season. Past experience shows that insolvencies have increased after the technical end of recessions as companies run out of working capital. Such conditions mean that the next twelve months are likely to be particularly difficult for management and may increase the risk that annual reports and accounts misreport facts and circumstances and contain uncorrected errors and omissions".