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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Ascertaining Going concern
Dear Gromit: i will probably have a foolowup question on this post, so i will be grateful if u cd look at this post again after ur initial response.. thanks
following is a question from dec 2007:
“ISA 570 Going Concern provides guidance to auditors in respect of ensuring that an entity can continue as a
going concern.
Required:
Explain the actions that an auditor should carry out to try and ascertain whether an entity is a going concern.
(5 marks)”
1. is it asking for audit procedures? if yes, the audit procedures are divided in 3 sections in kaplan text:
a. procs to assess management’s evaluation of GC
b. procs where there is a doubt about GC
c. procs on the Cash flow forecasts.
is it ok for me to pick random procs and list 5?
2. “to ascertain” can also mean to look at the GC indicators, like key staff leaving, net liabilities etc …..had i listed 5 such indicators, would my answer have been correct?
1 – Fine
2 – Unimaginative. The key to GC is really believable cash budget: businesses go bust because they run out of cash.
