The Auditing Practices Board’s Bulletin 2008/1 provides guidance for auditors on issues that may arise when financial market conditions are tough and credit facilities may be restricted.
The guidance focuses on the possible risks of misstatement to the financial statements arising from the possibility of the reduced availability of finance, and difficulties with valuing some assets for balance sheet purposes, especially those that are required to be measured at ‘fair value’.
APB chairman Richard Fleck says the guidance will help auditors “complete their current audits with appropriate rigour”.
Fleck notes: “The so called ‘credit crunch’ may increase the risks of material misstatement in the financial statements of some entities.”
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