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Hi,
Other than using procedures to assess, is there any other items that should be included on an audit programme to establish if an entity has a going concern problem?
And, for instance, in case an entity cannot prepare finanical statements that base on going concern basis, but on break-up basis, is there any impact on F/S other than assets are all classified at the net reliasible value and non-current liabilities are reclassified as current liabilities?
Thanks very much
I don’t understand your first question: procedures are ways of gathering evidence and all relevant procedures should be carried out such as looking at budgets, looking at early trading in the new year, examining bank loan and overdradt terms etc etc.
If there is no realistic prospect of a company continuing then, as you say, the FS should be on a break-up basis. The main addition you might have to look out for would be costs associated with discontinuance such employee redundancy costs and legal costs. Also, sometimes leases require property to be fixed up when vacated.
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