Page 11 - GOING CONCERN AND RELATED ISSUES

GOING CONCERN AND FACTUAL INSOLVENCY

Going Concern when planning the audit (risk

assessment) (continued…)

• When evaluating management’s assessment, consider:

1. Period of management’s assessment

2. Process followed to make the assessment
3. Assumptions used

4. Whether or not all relevant information known to the auditor was
considered

• Further audit procedures when indicators for GC issues exist:

• Request management to perform assessment;

• Gather evidence about feasibility and effectiveness of management’s
plans for remedial action (will it improve the situation?)

• Analyse cashflow forecasts:

• Underlying data
• Underlying assumptions

• Previous forecasts vs. actual results

• Current forecasts vs. current results

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