Answered: ASA570.10 requires the auditor to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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ASA570.10 requires the auditor to particularly evaluate the going concern problems and the related risk as part of the audit strategy and processes. What are the implications and the consequences for the audit if it is concluded that the going concern assumption is inappropriate and, as a result, the entity being audited is highly unlikely to continue in business in the foreseeable future? In your response and in your own words, discuss six (6) typical indicators of going concern problems and state the considerations and the additional procedures which should be included as part of the audit program.

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The idea of a "going concern" is the presumption that a company will carry on doing business indefinitely. As a result, the company will be able to pay off its obligations as they become due and bring in enough money to cover its operating costs. The going concern idea is crucial because it enables companies to make long-term investments and future plans.

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