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February 2010

One in four company accounts flagged by auditors

By Raman Jokhakar
Tarunkumar G. Singhal
Chartered Accountants
Reading Time 1 mins
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One in four company accounts flagged by auditors


One in four financial statements lodged by Australian listed
companies were flagged by auditors in the past year, as the global financial
crisis cast doubt on asset values and the ability of companies to refinance
debt.

According to figures provided by the Australian Securities
Exchange, 25 per cent of the 967 financial statements lodged up to June 30 —
those of 239 companies — contained a modified independent audit report, with
most related to whether the company would continue to operate as a ‘’going
concern’’. The figures exclude junior mining companies.

A modified audit report means the auditor has decided to
include information not contained in a standard report. Most audit modifications
are likely to involve an ‘’emphasis of matter’’ paragraph, which highlights
potential problems that may affect a company’s status as a going concern — its
ability to pay debts and continue operating. A ‘’qualified opinion’’ is a more
serious modification.

[Sydney Morning Herald, January 11, 2010]

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