Page 168 - Internal Auditing Standards

Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts

• Other major changes
This could include the possible loss of a principal supplier, major customer, key employee, or the right to
operate under a license, franchise, or other legal agreement.

The following exhibit sets out the auditor’s procedures in these situations.

Exhibit 14.3-1
Address Description
Documentary Document:
Evidence Available

• Terms of any loans and financing provided to the entity;
• Details of subordinated loans to a third party such as the bank;

• Details of financing by third parties based on guarantees or personal assets
pledged as collateral; and

• Details of other changes that could cast significant doubt on the entity’s ability
to continue as a going concern.
Additional Evaluate the ability of the owner-manager or other related parties to:
Support Available
• Provide the necessary additional support such as loans or guarantees; and
• Meet the obligations under the support arrangements.

Other Major Address the impact on operations of a major change such as loss of key customer,
Changes supplier, key employee, or loss of sales revenue due to technical obsolescence, new
competition, etc.
Request Written Request written confirmation of the:

Confi rmations

• Terms and conditions of the financial support being provided; and
• Owner-manager’s intentions or understanding with respect to the support
being provided.

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