ACCA (the Association of Chartered Certified Accountants), today welcomes the publication of the Sharman Inquiry’s preliminary report prepared for the Financial Reporting Council (FRC).
ACCA says that the quality of going concern assessments on the part of companies and auditors is evidently a source of continuing interest to investors.
John Davies, head of technical at ACCA, adds: 'Directors and auditors are already expected to make their respective assessments on a structured basis, so both are already familiar with the discipline of the assessment process. As with other aspects of the reporting process, though, users of accounts receive little in the way of information about how both have satisfied themselves about the company's status.'
ACCA asserts that providing more upfront information about how and why this assessment has been arrived it is clearly something that many investors consider would give them a better understanding not only of the company's solvency but of the director’s capability to manage material risks.
John Davies concludes: 'The proposed new corporate disclosures can only benefit companies if they increase levels of investor confidence. While we will support the idea of greater transparency on the disclosure of material risks, there must, though, be due recognition in the resulting requirements of commercial confidentiality.'
ACCA will be making a full response to the Inquiry’s proposals by the deadline of 31 December 2011.