FT: Auditors failed to raise alarm before 75% of UK corporate collapses

THE FINANCIAL TIMES reports:

Audit firms failed to raise the alarm before three-quarters of big UK corporate collapses since 2010, according to research, raising concerns that auditors are failing to perform one of their core functions.

Three in four audit reports failed to provide alerts that companies, which ultimately failed, risked going bankrupt by providing a “material uncertainty related to going concern” in the year before collapse, according to a report published on Monday by the Audit Reform Lab, a think-tank at the University of Sheffield.

Auditors are required to include a going-concern warning if they believe there is a risk that the company may go bankrupt, rather than making a prediction that it will.

The research, which analysed the audit reports of the 250 largest publicly listed companies that collapsed between 2010 and 2022…

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