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Can you explain the auditor's responsibilities in respect of going concern of a company?

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Question ajoutée par Frank Mwansa , ACCOUNTING LECTURER , FREELANCER
Date de publication: 2016/02/26
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par Utilisateur supprimé

The auditor is required to review the information used by directors in drawing their conclusion thatthe going concern basis is appropriate. The auditor also considers disclosures aboutgoing concern and liquidity risk made in financial statements. If the auditorconcludes that the disclosures are not adequate to meet the requirements ofaccounting standards, including the need for financial statements to give a true andfair view, they are required to qualify their opinion and to provide their reasons fordoing so.Where a material uncertainty exists that leads to significant doubt about a company'sability to continue as a going concern, the auditor has the following choices:

Where the directors have concluded that the going concern basis isappropriate:

Where the uncertainty has been adequately disclosed in the financialstatements, the auditor will issue an unqualified opinion, modified by includingan emphasis of matter paragraph. If there are significant multiple other materialuncertainties, auditors may disclaim their opinion instead of adding anemphasis of matter paragraph

Where the uncertainty has not been adequately disclosed in the financialstatements, the auditor will issue a qualified opinion, stating the reasons why, orgive an adverse opinion

Where the directors have concluded that the going concern basis is notappropriate:

Where the directors have followed an alternative basis, with which the auditoragrees, and have provided adequate disclosure in the financial statements, theauditor can issue an unmodified report (in relation to going concern). Suchsituations are rare.

An audit opinion that does not refer to going concern is not a guarantee that abusiness is a going concern.

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