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Hello mam,
If the question asks for procedures when ” Auditor has decided that the company is unlikely to be going concern”Does that:
1. imply automatically that It is NOT going concern. or
2.that the auditor has ”doubts” and there is ”material uncertainty w.r.t to going concern”Since the examiner usually doesn’t want us to come up with 2 options in the answer… but either could be the case here right?
General purpose financial statements are prepared on a going concern basis “unless management either (i) INTENDS to liquidate the entity/cease operations or (ii) has NO REALISTIC ALTERNATIVE but to do so”.
I think “unlikely” means “significant doubts”.
ISA 570 gives the following as an example of an events/condition that may cast significant DOUBT:
“Pending legal or regulatory proceedings … that may result in claims that the entity is UNLIKELY to be able to satisfy”.
So “unlikely” is an expression of doubt.
Thanks a zillion for the reference.
To clarify things to anyone reading this and apologies, I have been negligent for not relating this question to its scenario which indeed does talk about legal claims. (june 2008)
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