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i don’t understand the responsibilites of directors and auditors when it comes to going concern and what audit procedures can be carried out when doing the review of a going concern??
plz help!!!
The directors are responsible for preparing the FS and are responsible for ensuring that any notes about going concern (GC) are included and also that going concern is an appropriate basis.
The auditors audit the FS and have to examine evidence that the directors’ views on GC are correct. So, audit evidence would include:
Review of cash flow forecasts.
Review of budgets
Review of correspondence with banks, lawyers
Review of customers/jobs lost and key employees leaving
Letter of representation from directors stating the GC is OK
Review of disclosures in FS about GC
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