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Sue Almond, technical director at ACCA, says: "Going concern is clearly an issue that bears strongly on the credibility of accounting information and the confidence that users are able to derive from it. All practicable steps must be taken by boards and auditors to ensure that when the going concern basis is used to prepare a set of accounts it is appropriate to do so.
"Sharman’s recommendations emphasise the importance of going concern in the work of audit committees and auditors, so that they are appropriate and consistent with the direction of work which is already on-going within the FRC and the IAASB."
ACCA particularly welcomes Sharman’s proposal to pursue a common international approach to the going concern assessment itself and the disclosure of information about it, by means of adoption of these issues into the agendas of the bodies responsible for IFRS and ISAs.
Sue Almond concludes: "This would be a positive approach and one which would contribute significantly to improving investor confidence. Going concern is such a fundamental element of the understanding of financial reporting that it makes sense for it to be the focus of such international collaboration."
ACCA also notes the report’s comments about the importance of the quality of prudence when making assessments. ACCA supports this position but considers that IFRS provides sufficient scope for directors and auditors to make their assessments in a way which is consistent with the concept of prudence. IFRS specifically requires that the appropriateness of the going concern basis is considered and there are provisions requiring disclosure of material uncertainties about going concern.