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Going

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Submitted By sarahkhiyani
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TechnicAl

during The recenT globAl economic crisis, isA 570, going concern hAs been A well-esTAblished source of guidAnce for AudiTors. AddiTionAl direcTion hAs been provided by The iAAsb’s prAcTice AlerT AudiT considerATions in respecT of going concern in The currenT economic environmenT, issued in JAnuAry 2009.

relevAnT To AccA QuAlificATion pAper p7
The recent global economic crisis, commonly referred to as the credit crunch, has provided many challenges for both the preparers and the auditors of published financial statements. For auditors, ISA 570, Going Concern is a well-established source of guidance, and additional direction has been provided by the IAASB’s Practice Alert Audit Considerations in Respect of Going Concern in the Current Economic Environment, issued in January 2009. In the UK, the APB issued the Bulletin Going Concern Issues During the Current Economic Conditions in December 2008. Both of these are examinable documents for the Paper P7 exams in 2010. The auditor’s objectives in relation to going concern ISA 570 contains well-established guidance on going concern, including the following objectives for the auditor: ¤ to obtain sufficient appropriate audit evidence regarding the appropriateness of management’s use of the going concern assumption in the preparation of the financial statements ¤ to conclude, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern, and ¤ to determine the implications for the auditor’s report. All audits should involve an assessment of the appropriateness of the going concern assumption, and it is obvious to say that the auditor may well have to perform additional procedures when there are heightened risks relating to going concern, caused by difficult economic and

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