Identifying lessons for companies and auditors who are addressing going concern and liquidity risks, and improving the existing reporting regime
UPDATE 3 November 2011: The Sharman Inquiry has now issued its preliminary report and recommendations, as we discuss in this post.
As we reported in this post, on 8 March 2011 the Financial Reporting Council (the FRC) announced an inquiry (the Inquiry) to “identify lessons for companies and auditors addressing going concern and liquidity risk”. This followed the FRC’s work on these “critical corporate reporting and audit issues” during the extreme stages of the financial crisis in 2008 and 2009. As a result of that work, in November 2009 the FRC updated its publication “Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009“.
The Inquiry has today issued a Call for Evidence, which sets out a number of questions aimed at drawing “on the experience of companies and auditors who have had to address these issues in times of difficulty, including during the credit crisis”. The Call for Evidence can be accessed here.
The Inquiry is led by Lord Sharman of Redlynch and will presumably be known as the Sharman Inquiry. The closing date for evidence to the Inquiry is 30 June 2011. The Inquiry “is expected to provide its preliminary conclusions in the summer and final recommendations by the end of the year”.
Other purposes of the Inquiry
The Inquiry is designed to support the FRC’s work, launched in January 2011, on “Effective Company Stewardship – Enhancing Corporate Reporting and Audit“, which aims to consider how the effectiveness of the stewardship role of boards and audit committees can be enhanced through corporate reporting and audit, and will also add to the FRC’s contribution to the Department for Business, Innovation and Skills initiative on “The Future of Narrative Reporting.
UPDATE 14 June 2012: The Sharman Inquiry has now published its final report, as we cover here.
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