Case – 7-54
"Going Concern" Please respond to the following:
From the e-Activity, analyze the auditor’s responsibility to determine if a company can continue as a going concern. From your analysis, propose at least two (2) key factors that the auditor should consider when determining an entity’s ability to continue as a going concern. Provide a rationale to support your proposal.
SAS 59, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern (AICPA, Professional Standards, vol. 1, AU section 341) - The auditor is now required to document the conditions that substantiated the substantial doubt that the entity would continue to exist, elements of management’s plans that appear to be particularly …show more content…
In the Inquiry of a Client's Lawyer Concerning Litigation, Claims, and Assessments, the date by which the lawyer's response should be sent to the auditor. In the CR Brown inquiry the date is not shown. Also, the letter should request the lawyer to specify in his response the latest date covered by his review (the "effective date"). It should be recognized that, to adequately respond to an audit inquiry letter, lawyers will ordinarily employ some internal review procedures which will be facilitated by specifying the earliest acceptable effective date of the response and the latest date by which it should be sent to the auditor. Ordinarily, a two-week period should be allowed between the specified effective date of the lawyer's response and the latest date by which the response should be sent to the auditor. Clearly stating the relevant dates in the letter and specifying these dates to the lawyer in a timely manner will allow the responding lawyer an adequate amount of time to complete his review procedures and assist the auditor in coordinating the timing of the completion of his field work with the latest date covered by the lawyer's review. http://pcaobus.org/Standards/Auditing/Pages/AU337.aspx. Shirley
There are people out there that argue that an auditor determining and reporting on a going concern can become a self-fulfilling prophecy. Do you agree with this? Why or why not? Class?
Professor and Class,
The fear is