Page 18 - GOING CONCERN AND RELATED ISSUES

GOING CONCERN AND RELATED ISSUES

Subordination (backranking) agreements

• This is an agreement by a substantial creditor(s)

whereby they bind themselves either indefinitely, or for

a limited period, either unconditionally or subject to

specific conditions, not to claim or accept payment of

the amounts owing to them until the happening of a

particular event (e.g., the restoration of solvency).

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• Refer to Auditing Notes 10 edition pages 15/16 -15/17

• Auditor should confirm the continued validity and

existence of the agreement prior to the issue of the

auditor’s report.

• Disclosure in the AFS….?

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