UK Tribunal Finds Auditor's Judgment Reasonable on Going Concern Issue

A UK Tribunal has found that a Big Four audit firm’s opinion that there was not a significant level of concern on the client company’s ability to continue as a going concern was a reasonable judgment based on the evidence the firm had collected and assessed. Thus a complaint brought against the firm by the UK audit oversight authority was dismissed. The audit firm’s conclusion was within the range of judgments that might reasonably be reached by a competent auditor on the basis of what the auditor understood, said the Tribunal, adding that the firm gave the going concern issue the considered appraisal that it required. PricewaterhouseCoopers LLP

In a 4-1 opinion, the Tribunal also noted that the company had a strong and highly experienced board of directors that purported to consider the going concern issue with care and with the guidance of experienced counsel. Evidence indicated that no member of the board had serious concerns about whether the business was a going concern when they signed the financial statements. Although refinancing was an uncertainty, it was not a significant uncertainty. The complaint was brought by the Accountancy Investigation and Discipline Board, an arm of the UK’s audit oversight body. The Tribunal was drawn from a panel maintained by the Board.