Survive the Downturn - Manage Your Year End

Extract from ICAEW report: 8 Ways To Survive The Downturn


Find out how building additional time into your year-end planning can help your business survive the downturn.

It will be essential that you build additional time into your year-end planning. This will ensure that there are no surprises and that you have sufficient time to discuss any issues with your advisers and shareholders. These issues need to be reviewed on an ongoing basis.


Going concern

As many companies face increased uncertainties, going concern will have a higher profile in the preparation of annual reports and accounts. The question that needs to be asked is ‘is the business likely to survive for the foreseeable future?’

You must have adequate documentation – such as cash flow forecasts and board papers – for the application of the going concern basis. It will also be important for you to document carefully the evidence on which assessments and decisions are made.

There will also be an expectation of increased disclosures, both on the financial position in general and on liquidity risk in particular.

Directors will find further help on the application of going concern in the current economic climate in the guidance issued by the Financial Reporting Council and the Auditing Practices Board bulletin for auditors.


Make sure adequate funding is available

Current circumstances mean you will need to consider how to manage going concern issues by meeting financial obligations when they need to be paid.

This means that you must carefully and regularly manage your cash flow to make sure that adequate funding is available when you need it. It’s better to be prepared for a ‘worst case scenario’ than to assume that all that is needed is a bit of pruning at the edges.

Source ICAEW - full report can be downloaded by clicking here.