The Financial Reporting Council (FRC) released its review of audit enforcement actions for the year ending 31 March 2022 last week. FRC opened 69 new enquiries in the preceding year and concluded 17, an overall drop in activity. Most of the new cases were referred from the FRC’s Audit Quality Review groups.
Not surprisingly, lack of independence around issues that require specialised business valuation expertise rise to the top. The FRC Annual Enforcement Review mentions the usual suspects, including:
- Goodwill accounting;
- Going-concern analyses;
- Management forecast scrutiny;
- Contingent liabilities and risk from loss-making activities; and
- Judgements and objectivity when making accounting estimates during volatile periods.
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