Auditors will closely monitor the financial statements of small business this year, as the economic crisis has led to a lack of available credit for business, says the National Institute of Accountants.
NIA chief executive officer Michael Carmody said not all businesses are viable in the present economic climate, and auditors will have to look more closely when dealing with an “entity that appears to be in financial stress.”
Insolvencies among small and medium businesses have increased in recent months, which is a result of “a lack of available credit for business” affecting their “ability to continue,” says Carmody.
Many small businesses are also experiencing difficulties in the current climate due to bad management practises, with the current climate “magnifying” mistakes or difficulties.
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