Hi,
I'm trying to compile a one page 'fact sheet' style report to give to clients regarding going concern and disclosures in accounts. This is aimed at small non-audit clients who comply with FRSSE. I want to try and give them in the report a real life example of company directors who may have been taken to court over incorrect or non disclosure relating to going concern, to highlight actual real life risk to them. Does anyone know of any resources/information/groups/previous questions etc. where I can find this out?
Many thanks to any responders.
Replies (7)
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What risk?
Assuming you have already exhausted your own research materials & googled it, yet still come up empty you may have answered your own question.
What non-disclosure?
Going concern disclosures are normally about why a company is considered a going concern, even when the figures indicate otherwise. I cannot imagine someone suing over not putting in such a note ("I expected the company to tank and was very hurt when it continued to operate") so what non-disclosure did you have in mind?
tanked already!
("I expected the company to tank and was very hurt when it continued to operate")
Actually the notes to accounts read ' tanked aleady and nothing to report'!!
I've never heard of such a case being brought.
There have been complaints about auditors not auditing GC disclosures adequately, and perhaps even cases brought against them, but I realise that is not what you are looking for.
Hard to prove
Unless the figures show a problem (in which case going concern will be obvious to those seeing the figures) then I think it would be hard to prove that the directors would have known going concern was inappropriate. Far more likely that any such cases are brought about as wrongful trading instead, which is not a disclosure issue and more likely to be related to after date activity anyway.
I fear you may be looking for something which does not exist. For that matter, why do you think you need a fact sheet on it anyway. Going concern disclosure means the business is in trouble. If I was a businessman, I'd worry about my accountant giving me an information sheet about my responsibilities if my business is going under.
Academic discussion
This discussion looks very academic given the sheer number of accounts filed with the companies house showing negative shareholders' funds. However, given OP's enthusiasm for research here are some references:
1. This FRC document which is presumably what the OP is referring to.
2. The statutory reference to GC is in para 11, part 2 of this schedule which was issued pursuant to s.396, CA/06
3. It's not about the dearth of statutory provisions but it will be interesting to see millions of A man & his Dog Ltds pursued for defective accounts!!!!!!!