Going Concern (Responsibilities of Directors and Auditors)

Question 1

What is the directors’ responsibility?

Answer 1

Determine whether or not an entity is a going concern

Question 2

What occurs according to ISA 570?

Answer 2

It isd auditor’s responsibility to make an assessment as to whether the directors’ conclusion is appropriate

Question 3

What should the director’s conclusion assessment be based on?

Answer 3

The results of the going concern review performed by the auditor

Question 4

What must auditor consider in a going concern review (going concern)

Answer 4

Whether the use of the going concern basis is appropriate

Question 5

What must auditor consider in a going concern review (adequate disclosure)

Answer 5

Whether adequate disclosure has been made of any material uncertainties affecting going concern

Question 6

What must auditor consider in a going concern review (adequate disclosure)

Answer 6

Whether management’s assessment was adequate

Question 7

What if there is a going concern about material?

Answer 7

Then auditor should consider the implications for their auditor’s report