audit procedures
During the audit of a manufacturing company, you have noted certain conditions that cast significant doubt on the company’s ability to continue as a going concern. You had a meeting with the CEO of the Company to discuss the issue and communicated your decision that at least an emphasis of matter paragraph in the Audit Report is inevitable. The CEO disagreed with your opinion and shared with you the management’s plan to deal with the potential going-concern uncertainty. The plan mainly constitutes the following measures:
(i) The Company is guaranteed a continuous financial support by the parent company.
(ii) It has recently rescheduled its borrowing facilities.
(iii) The management has plans to reduce overheads and administrative expenses.
(iv) the management had decided to discontinue a segment with no profitable operations.
(v) The management has plans to increase equity and
(vi) The management is expecting profitable operations in the next year.
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