ISA 570: Going Concern guides auditors to ensure that an entity can continue to operate into the foreseeable future.
Required:
State TWO (2) audit tests necessary to ascertain whether an entity is a going concern. (5 marks)
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- Review management’s plans for future actions based on its going concern assessment.
- Gather additional sufficient and appropriate audit evidence to confirm or dispel whether or not a material uncertainty exists regarding the going concern concept.
- Seek written representations from management regarding its plans for future action.
- Obtain information from company bankers regarding the continuance of loan facilities.
- Review receivables ageing analysis to determine whether there is an increase in days, indicating cash flow problems.