Going concern assessment

The Pensions Research Accountants Group (PRAG) has published guidance to assist trustees and auditors in developing a practical and proportionate response to dealing with the raised profile of the concept of ‘going concern’ when they are preparing and auditing pension scheme financial statements. The guidance has been put together by PRAG’s SORP Working Party.

Kevin Clark, Chair of the PRAG SORP Working Party, said, ‘Audit reports are now required to comment on the appropriateness of the going concern basis of accounting. This requirement applies to the audit of pension schemes. Trustees are also required to make a statement about going concern in the statement of trustee responsibilities. Although this does not represent a change to pension scheme auditors’ and trustees’ responsibilities, PRAG anticipates that this requirement will raise the profile of the going concern assessment and therefore considers it helpful to provide practical and proportionate guidance for trustees and pension scheme auditors.’

Shona Harvie, Chair of the PRAG Executive, said, ‘For the majority of pension schemes, the going concern assessment will be straightforward and the additional disclosure in the scheme audit report will be uncontroversial. However, there will inevitably be a small number of instances where the going concern assessment will be more challenging and disclosures will be more sensitive. We suggest early and clear communication to all interested parties about the going concern disclosure requirements. Thank you very much to the members of the working party that put this guidance together.’

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For further information, please contact PRAG’s Press Officer.