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Hi sir, is it true that auditors have a responsibility to report to the directors in relation to any events or conditions which may cast doubt on the company’s ability to continue as a going concern ?
If so, why ?
Because the directors are already required to disclose in the financial statements, the principal events or conditions that cast significant doubt on the entity’s ability to continue as a going concern.
So, why should the auditors report to the directors , regarding something that is already known by the directors ?
I’m confused sir. The auditor should report regarding the going concern of the client, to the client itself or to the shareholders ?
It is the directors responsibility to assess going concern. It is the auditor’s duty to audit that assessment. Obviously any difference of opinion will be discussed between the directors and auditors.If the directors think there is no going concern problem and no mention is made in the FS, the audit opinion will be modified. If there are doubts about GC and this is mentioned in the FS, the audit report will contain a paragraph pointing out the doubt (but that is not a modified opinion).
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