Going Concern Flashcards
Where should the auditor include information of material uncertainty
Within the auditors report headed “material uncertainty related to going concern”
What are examples of indicators for Going concern
Negative operating cash flow
Inability to pay suppliers
Operating losses
Borrowing facility is coming to an end and no new facilities agreed
Loss of key staff
Technological changes
Legislative changes
Non-compliance with regulations
What’s works Should the auditor to do to assess Going concern uncertainty
Evaluate management plans for future actions in relation to growing concern and whether the outcome of these plans are feasible unlikely to improve the situation
Regarding cash flow forecast: evaluate the reliability of the underlying data, determine whether there is adequate support for the assumptions under the forecast
Consider whether any additional facts or information had been available since the date of which management made its assessment
Request written representation from management and come out where appropriate, those charged with governance, regarding their plans for future actions and the feasibility of those plans
