audit reports - going concernin the vast widely


Audit Reports - Going Concern

In the vast widely of cases, the going to relate assumption is suitable and whether applied no mention require be made in the auditor's report.

In rare incidences, notes to the accounts may create reference to the going to relate assumption. This may involve references to continued favourable availability or trading of finance. It may be such then going to relate assumption is not in doubt, however for a full understanding of the accounts there is require for amplification of these notes.  In such cases, the auditor may utilize an emphasis of matter that is not a qualification and is allowed in ISA 700

Whenever the auditor has complete doubt that the going concern assumption so he may be necessary to qualify his report and this is a highly charged region for the auditor since an expression in his audit report such a company is not a going to relate may in itself bring about the closure of the company.  The auditor should consequently:

a) Not refrain from expressing a qualified thought even though this may lead to liquidation or receivership;

b) The auditor have to consider materiality, whether the adjustments required on abandoning the going to relate assumption are not material, then no qualification should be known;

c) Whether the auditor concludes such there is doubt then he has to consider the consequences for the figures in the accounts.  As an example, he should receive an estimate of the essential provision against stock or the redundancy payments.

In practice since of the complexities included in creating adjustments to the accounts and producing them on a break up basis, accounts in quite cases in US are produced on the going to relate assumption and qualified through the auditor on the grounds such the going concern assumption may not be suitable.

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