(Bloomberg) -- The largest U.K. audit firms have beefed up their measures to better evaluate if companies risk running into financial difficulty since the onset of the coronavirus pandemic, the U.K. accounting watchdog said.
These steps include broadening the scope of required consultations and central guidance for audit teams, and increasing regular communications with them, the Financial Reporting Council said Thursday in a statement.
“The pervasive and uncertain impact of Covid-19 has made assessing whether companies have a material uncertainty to going concern much more difficult for many boards and their auditors,” David Rule, the FRC's executive director of supervision, said in the statement.
The additional measures auditors are implementing were “sensible,” he said.
The so-called Big Four auditors are under greater scrutiny than ever before after a serious of high-profile lapses in recent years, with Ernst & Young's role in the collapse of German payments provider Wirecard AG now under the microscope.
The review involved the seven biggest firms in the U.K., the FRC said.
At the same time, the plunging economic fortunes of many companies because of the pandemic has prompted them to try to better gauge any companies at risk of collapse.
Read more: Wirecard Exposes Big 4 Accounting Lapses Endure Post-Enron
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