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Auditing in the Recession

  • 21-11-2008 5:38pm
    #1
    aintnosunshine
    Closed Accounts Posts: 47 ✭


    Hi Everyone.

    i'm thinking of doing my thesis on Auditing for the resession.. it's basically looking at how companies up untill about 2years ago were constantly revaluing and creating revaluation reserves and now since the property crash are they as quick to devalue it.

    Does anyone know have Auditors changed the way they Audit for this..

    And have companies changed their policies regarding how they record their property and depreciate it, since the crash.

    Any advice or help would be very much appreciated..


Comments

  • #2
    Hanley
    Banned (with Prison Access) Posts: 21,981 ✭✭✭✭Hanley


    Presumably depreciation shouldn't really change that much because the UEL of the asset isn't being effected. The residual value may be lower, but changes in estimate don't tend to happen during the term to reflect this, but only if the UEL is drasticly reduced or the asset becomes obsolete.

    I think...


  • #3
    Kinetic^
    Closed Accounts Posts: 13,249 ✭✭✭✭Kinetic^


    Why not choose liquidation/administration/receivership?


  • #4
    whatawaster
    Registered Users, Registered Users 2 Posts: 12,910 ✭✭✭✭whatawaster


    aintnosunshine wrote: »
    Hi Everyone.

    i'm thinking of doing my thesis on Auditing for the resession.. it's basically looking at how companies up untill about 2years ago were constantly revaluing and creating revaluation reserves and now since the property crash are they as quick to devalue it.

    Does anyone know have Auditors changed the way they Audit for this..

    And have companies changed their policies regarding how they record their property and depreciate it, since the crash.

    Any advice or help would be very much appreciated..

    If they've ever revalued an asset to fair value, that, i think, represents a change in accounting policy which must be consistently applied in subsequent periods. Revaluations, therefore, must be carried out regularly and the asset is written down to its Fair Value.
    Auditors will have to make sure the relevant accounting standards are correctly applied.

    But even if the fair value model hasn't been applied, many assets would now be impaired and need to be written down?


  • #5
    Newaglish
    Registered Users, Registered Users 2 Posts: 2,734 ✭✭✭Newaglish


    aintnosunshine wrote: »
    Hi Everyone.

    i'm thinking of doing my thesis on Auditing for the resession.. it's basically looking at how companies up untill about 2years ago were constantly revaluing and creating revaluation reserves and now since the property crash are they as quick to devalue it.

    I'm not sure why you think companies would be so desperate to write off the values of their assets? Particularly if they are struggling at the time.

    In terms of auditing, the possibility of impairment and future going concern issues would probably need to be addressed when auditing a company that is performing poorly; is that what you're getting at?

    Auditing isn't mostly about catching people out maniuplating accounts; it's purpose is to check for material errors.


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