Source: Radio New Zealand
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Auditors have issued business failure warnings for 15 percent of New Zealand’s listed companies, a new report says.
Chartered Accountants Australia New Zealand (CA ANZ) released data that shows an increase in the number of companies where auditors have highlighted a material uncertainty related to a going concern.
It was up from 13 percent in 2021, and well up from about 8 percent in 2023.
The report examined auditor reports of NZX-listed companies that issued financial statement in 2025.
In Australia, 30 percent had a going concern warning.
CA ANZ reporting and assurance leader Amir Ghandar said it showed how difficult operating conditions had become, particularly for companies reliant on ongoing access to capital.
“Auditors are now flagging greater uncertainty than during the pandemic itself, which shows how sustained economic pressures around liquidity, refinancing and future profitability can be just as challenging for businesses as an acute shock.”
Ghandar said New Zealand was in a comparatively stronger position than Australia, but was not immune.
CA ANZ reporting and assurance leader Amir Ghandar. (File photo) Supplied / Chartered Accountants Australia and New Zealand
“Certain sectors are under sustained pressure. Going concern flags are most frequent in consumer staples, health care and information technology, sectors where business models are often capital intensive, dependent on future growth, or exposed to volatile input costs.
“In these sectors, access to funding, confidence in future earnings and the ability to absorb cost shocks really matter.”
Neil Paviour-Smith, managing director at Forsyth Barr, said an increase compared to 2021 was not surprising because it had been a relatively strong time for the economy.
“While the world was still grappling with the effects of Covid, in the aftermath, in a business sense, you had governments providing subsidies, you had zero interest rates, you had governments or reserve banks printing money.
“It was a pretty strong economic recovery… since then things have tailed off, we’ve had inflation, cost pressures and other factors… it’s a much more difficult environment now relative to 2021.”
He said auditors were pointing out the pressure was on, that there were challenges to the businesses’ ability to remain a going concern.
“It’s sort of accounting language for continuing to be viable as a business and meeting its obligations.”
He said businesses could still turn around.
“It can be hard slog to get there. In some instances it means deep restructuring, cost cutting, asset sales, changes in the way in which business is performing in order to salvage the business.
“That’s where boards and management are looking very hard at – do we have a viable business? Or it may well be that the market has so fundamentally change that you’re hanging on to the past rather than looking ahead.”
For some the environment might have changed too much to continue, he said.
“If you look at retail for example, there are certain brands, whether it’s fashion or whether it’s hospitality where certain bars and restaurants just aren’t supported by customers, they like going to other places… same with retail. If you’re in a sector that’s struggling, the strongest will prevail.”
He said the fuel price pressure would flow through to inflation and higher wage demands from staff.
“At a time when households and businesses are probably going to act somewhat cautiously in terms of their own spending, which will have a revenue consequence.
“I imagine it wouldn’t be surprising if you saw the number of companies with material uncertainties increasing again because of the environment we’re in.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
