Company insolvency a danger in 2009
The chief executive of the National Institute of Accountants (NIA), Andrew Conway, has warned that the number of companies going into administration is expected to rise through 2009, and business owners need to watch closely for indications that they are close to insolvency.
Figures released by the Australian Securities and Investments Commission show the total number of companies going into administration has more than doubled since the beginning of the year, from 517 to 1,095.
“I would encourage businesses to develop a close working relationship with their accountant and use their expertise in understanding trends and financial statements to ensure the business’ survival,” Conway said.
The senior partner at Worrells Solvency and Forensic Accountants, Ivor Worrell, said continuing losses, no access to alternative funding or finance, and overdue taxes were signs that a business was moving close to insolvency. A failing business typically goes through patterns of consolidation, decline, denial and collapse before they declare insolvency, he said.
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