A topic that causes a lot of uncertainty in the profession is that of insolvency, mainly because there are different types of insolvencies that must be considered by the accounting professional. Accounting professionals also have a duty to report these insolvencies whilst performing certain types of engagements. Information about these insolvencies and how to deal with them are not always readily available, therefore I decided to put together this presentation to assist practitioners in this regard.
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During this presentation I will be answering the following questions:
What is the difference between the following?
1. Technical or factual insolvency
2. Commercial insolvency
3. Financially distressed
4. Going concern problems
5. Fraudulent or reckless conduct
6. Common law fraud
When does any form of insolvency become an irregularity?
When does insolvency constitute an offence or infringe a statutory or common rule?
When should the auditor report insolvencies?
When should the independent reviewer report insolvencies?
When should the accounting officer report insolvencies?
When must the directors of a company perform a solvency and liquidity test?
Under which circumstances will the Commission issue a notice to a company to cease trading?
What effect will the following have on the insolvency position of a company?
1. Subordination agreements
2. Letters of comfort
3. Guarantees
4. Letters of support
What type of liability could an auditor, independent reviewer, accounting officer or director of a company of a director incur for not dealing in an appropriate manner with any form of insolvency
All accounting professionals and their staff will benefit from this presentation.
