Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › going concern audit procs
- This topic has 2 replies, 2 voices, and was last updated 8 years ago by mansoor.
- AuthorPosts
- December 3, 2015 at 2:48 pm #287284
following is an exam scenario and i have listed it in point form. we are supposed to provide audit procedures to assess if Straw is a going concern. i have listed answers that did not match the the answers given in the list. i wd like to know if these are valid
scenario
1. straw has been experiencing trading difficulties
2. its major customer who owes .6m has ceased to trade and the balance is unlikely to be received
3. the sales director has left and replacement has not been found
4. cashflow shows negative for the coming year
5. due to tight cash, they are notpaying the suppliers and some have threatened legal action
6. straw has breached a loan covenant and the bank has that the loan of 4.8m be repaid in 6 monthspls let me know if the following procedures are valid:
1. review the loan agreement to ascertain if a breach indeed has been made and if there other covenants open to risk of being breached
2. discuss with directors if they have lined up other sources of funds, either from shareholders or new investors, to repay the loan
3. review supplier correspondence to ascertain the risk of legal action and the associated financial impact
4. compare post year cash receipts and compare to the forecast to determine the reliability of the forecast and to see if the receipts are above or below those forcasted
thank u
December 3, 2015 at 3:25 pm #287293Those points are all fine.
December 3, 2015 at 3:38 pm #287297wow.. thank u sir!!!!!!!!!!!!
- AuthorPosts
- You must be logged in to reply to this topic.