Auditors Requirements: Going Concern

accounting_ixbrl_consolidated_accounts The issue of going concern is of significant interest in light of the global financial crisis. Stakeholders have called for increased focus on going concern matters by management and auditors. Various auditing oversight bodies work on the topic of going concern has sought to respond to the call for greater focus on going concern in light of its remit. The focus of the auditor is to find an appropriate balance of reporting between entity-specific information about the auditor’s findings with respect to going concern and more standardized language describing how the auditor approaches going concern in an audit. Investors and others have requested earlier warning of potential issues that may exist with respect to an entity’s ability to continue as a going concern. This is particularly the case in situations where events or conditions were identified that may cast significant doubt on the entity’s ability to continue as a going concern but, after considering management’s plans to deal with these events or conditions, management and the auditor conclude that no material uncertainty exists. The assessment of an entity’s ability to continue as a going concern and communication about going concern issues are the responsibility of management and those charged with governance in view of the requirements of the applicable financial reporting framework, as going concern is a fundamental aspect of financial reporting. It is the auditors job to review the managements’ assessment of going concern and the assumptions and underlying principals therein and conclude on the reasonableness of the assessment and the accuracy of the disclosure made in the financial statements based in those assessments. The disclosure requirements related to going concern are set out in the applicable financial reporting framework.

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