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Richard Oury FCA FCCA MABRP - Senior Partner OCA
We would strongly recommend in light of the present economic climate and the recent guidance that the auditors have received in relation to going concern concepts, that companies subject to audit should be considering most carefully their financing arrangements and in particular, their ability to pay back loans and whether covenants in respect of such loans may be broken in the foreseeable future.
I have seen a number of cases recently where substantial bullet repayment loans granted are now a limited number of years away from repayment and with the downturn in economic activity, there is an obvious concern as to whether or not companies will be able to repay such debts and if it is clear that they are unlikely to be able to do so, this will bring about a qualified audit report or at least significant notes in the accounts highlighting the position.