Going Concern Flashcards
Define and explain
1
Q
What is Going Concern
A
the assumption that a company will continue business for the foreseeable future
2
Q
responsibility for auditors
A
- report in accordance with isa 570
- obtain evidence regarding appropriateness
3
Q
responsibility for Directors
A
- disclose material uncertainty
- prepare forecasts (12 months)
4
Q
Financial indicators of going concern :
A
- negative operating cashflow
- net liability
- operating loss
- reliance on short term loans
5
Q
Operating indicators of going concern :
A
- labour difficultys
- successful competitors
- loss of major market/ management
6
Q
Other indicators for going concern :
A
- changes in legislation
- legal proceedings
- non compliance with regulations
