London Daily

Focus on the big picture.
Sunday, Aug 02, 2026

U.K. Regulator Tells Auditors to Be Tougher on ‘Going Concern’ Assessment

U.K. Regulator Tells Auditors to Be Tougher on ‘Going Concern’ Assessment

The U.K. Financial Reporting Council tightened a key accounting standard used to assess a company’s health following a string of corporate collapses in Britain.
The U.K. Financial Reporting Council on Monday tightened a key accounting standard used to assess a company’s health following a string of corporate collapses in Britain. The accounting and audit sector regulator issued a revised version of ISA U.K. 570, the standard that governs the definition of a business as a “going concern” that is likely going to continue operating for at least another year. Businesses are generally considered going concerns unless management intends to liquidate them or cease operations, or the entity doesn’t have a realistic alternative but to do so. Under the new standard, auditors will be required to more robustly challenge management’s going concern assessment, test the supporting evidence and evaluate the risk of management bias, the FRC said. Auditors will have to consider all of the evidence obtained when drawing their conclusions on going concern, even if part of the evidence is contradictory. Auditors of firms considered public-interest entities, such as credit and insurance companies, and publicly listed and large private companies are required to provide a clear conclusion on whether management’s assessment of going concern is appropriate, the FRC said. “Our own enforcement work has demonstrated a need to strengthen existing going concern standards, which is a fundamental aspect of audit, so that investors can have confidence in audited financial statements and businesses’ financial prospects,” FRC Chief Executive Stephen Haddrill said. The standard change, which will be effective for reporting periods starting on or after Dec. 15, sets out tougher requirements for auditors than current international standards, the FRC said. It comes amid increasing scrutiny from regulators and lawmakers over the country’s accounting and audit sector, in particular the quality of the work provided by the Big Four firms Deloitte & Touche LLP, Ernst & Young LLP, KPMG LLP and PricewaterhouseCoopers LLP. “This is in response to findings from our enforcement and audit investigation work, including learning the lessons of BHS,” a spokesman for the FRC said. BHS Ltd. was a British apparel and furniture retailer that collapsed in the spring of 2016. Other British companies followed suit, among them construction firm Carillion PLC and coffee chain operator Patisserie Holdings PLC. Lawmakers and regulators are discussing an overhaul of the rules governing the U.K. accounting and audit sector. The Competition and Markets Authority has suggested an operational split between companies’ audit and nonaudit businesses, while a parliamentary committee called for a structural separation. The FRC during the year ended March 31 increased the number of investigations against the country’s audit firms, and handed out more and higher fines than in previous years. As part of the changes in the sector, the FRC will become part of a new regulatory body called the Audit, Reporting and Governance Authority.
Newsletter

Related Articles

0:00
0:00
Close
Finland Deploys Commercial-Scale Thermal Batteries Using Crushed Rock to Store Renewable Grid Energy
Valued at $109 Million: F-35B Fighter Jet Crashes in Southern California
Sainsbury Agrees to Sell Argos in £120 Million Deal to Private Consortium
High Court Clears Way for Construction of Chinese Embassy at Royal Mint Court
UK Fuel Prices Climb to Multi-Month Highs as Strait of Hormuz Tensions Disrupt Oil Supplies
Severe Summer Drought and Record Heat Put UK Harvests at Risk
Prime Minister Andy Burnham Faces Labour Backbench Opposition Over Potential Support for New North Sea Oil and Gas Drilling
Bank of England Warns Inflation Will Stay Above 3% as Middle East Energy Shock Prolongs Cost-of-Living Pressures
Andy Burnham has Announces Plans to Redistribute Income Tax Revenue to English Mayors
Early-Release Scheme Faces Fresh Scrutiny as Reoffending and Prison Recalls Rise
Police Phone Checks Followed Report on Murder of MI5 Agent Inside Sinn Féin
Archbishop of Canterbury Reaffirms £100 Million Reparative Justice Fund During Ghana Visit
Charities Allege French Police Used Tear Gas Against Channel Migrants
Norwegian Teenager Convicted Over Iran-Linked Murder Plot in Britain
Christian Organisations File Charity Complaints Against Amnesty International UK
Ofgem Tightens Grid Connection Rules for New Data Centres
FTSE 100 Reaches Record High Despite Global Technology Sell-Off
Millions of UK Households Urged to Check Eligibility for Winter Energy Discount
Labour Restores Parliamentary Whips to Diane Abbott and Joani Reid
UK Supreme Court to Hear Challenge Over Palestine Action Ban
UK Commits More Than £8.4 Billion to Dreadnought Nuclear Submarine Programme
England Declares Severe Drought as Wildfire Burns Near Sizewell Nuclear Site
Bank of England Holds Interest Rates at 3.75% as Middle East Tensions Fuel Inflation Risks
Drought Status Extended Across All of Wales as Heat and Dry Weather Deepen Environmental Strain
Record-Low Danube Exposes Probable Mammoth Remains in Bulgaria
UK Business Confidence Climbs to Four-Month High
Greater Manchester Gains Expanded Powers Under Regional Funding Reforms
UK Supreme Court to Hear Appeal Over Palestine Action Terror Ban
Shell's Quarterly Profit Doubles to Nearly $10 Billion on Higher Energy Prices
UK Government Removes VAT From Household Electricity Bills
Exceptional Drought Grips Half of England as Wildfire Threatens Sizewell
Bank of England Holds Interest Rates at 3.75% as Inflation Risks Persist
US Says It Has Carried Out Heavy Strikes on Iran After Attempted Attacks on Its Forces
The chief executive of the popular gaming company laid off many employees and his pay rose to 38 million dollars
UK Employment Holds Steady as Wage Growth Remains Moderate
England to Introduce Artificial Intelligence into Secondary School Curriculum
Wales Launches £1.2 Billion Industrial Regeneration Programme
High Court Upholds UK Digital Surveillance Framework
Northern Ireland Reaches Budget Agreement on Infrastructure and Public Sector Pay
Home Office Expands Digital Border Checks Nationwide
UK Approves Major North Sea Wind and Carbon Capture Project
The World's Most Terrifying Smartphone: Recording, Documenting, and Reporting to the Regime
Scotland Approves Major Renewable Energy Expansion
UK and United States Sign AI and Semiconductor Cooperation Pact
UK Treasury Tightens Fiscal Controls After Gilt Market Volatility
Bank of England Holds Interest Rates at 4.5%
UK Unveils £10 Billion NHS Funding Overhaul and Workforce Reform
The AI User Nightmare: Private Claude Conversations Leaked to the Internet
UK: Former Football Association Leaders Call for World Cup Boycott Over FIFA Privatization Plan
Forbidden Love: China severs millions from their virtual partners
×