There are three situations that ISA 570 identifies in terms of the use of the going concern basis of accounting:
There are three situations that ISA 570 identifies in terms of the use of the going concern basis of accounting: Evaluating the entity’s plans to deal with unfulfilled customer orders. Obtaining and reviewing reports of regulatory actions. Reporting An important point to emphasise at the outset is that candidates are strongly advised not to use the ‘scattergun’ approach when it comes to deciding on the audit opinion to be expressed within the auditor’s report. This is where a candidate explores all possible options rather than coming to a conclusion as to the auditor’s opinion, depending on the circumstances presented in the question. use of the going concern assumption is appropriate but a material uncertainty exists use of the going concern assumption is inappropriate management unwilling to make or extend its assessment. A reporting entity that considers the going concern basis of accounting to be appropriate, but still has a material uncertainty present will have to make disclosure of the fact in the financial statements that there are uncertain future transactions/events that may result in the entity being unable to continue in business in the foreseeable future. The auditor will consider the adequacy of the disclosures made in the financial statements by management. […]
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