beckton wrote:Can someone explain to me why an auditor wouldn't sign off last years accounts over a potential future liability?
Medoc wrote:Very simple; part of the auditors remit is to declare that the company is "viable as a going concern". Future liabilities have a material bearing.
A provision can only be made if a transaction meets all three of the following criteria (IAS 37):
There is an obligation to transfer economic benefit as a result of past transactions/events
It's probable (more likely than not) an outflow of resources will be required to settle the obligation
A reliable estimate can be made of the amount of the obligation
So we wouldn't be able to make a provision in the accounts and the auditors could sign off the rest of the accounts except for the outstanding issue with SU.
They couldn't put us into administration because of this.