Auditing and Assurance: Deep Dive into ASA 570 Going Concern

This report provides an overview of ASA 570, the auditing standard concerning going concern. It explains the auditor's responsibilities in assessing a company's ability to continue as a going concern, emphasizing the importance of evaluating management's assessment and plans. The report highlights factors affecting the auditor's judgment, including inherent limitations and the potential for future events to impact the assessment. It outlines the procedures auditors should follow when identifying events or conditions that may cast doubt on a company's ability to continue, including reviewing management's evaluation, assessing the reasonableness of management's plans, and evaluating the impact of uncertainties. The report also touches upon going concern considerations in the public sector and concludes by emphasizing the importance of the auditor's assessment and its impact on financial reporting.

Auditing and Assurance

TABLE OF CONTENT
 ASA GOING CONCERN
 REFERENCES

INTRODUCTION
 The financial statements are generate/home/user/Desktop/Audit.pngd on
the grounds of the existing accounting issue in the event that the
company is a current issue and continues to exist in the near future.
Common financial statements is generated using accounting basis of
company, even as the company plans, and therefore has no feasible
option, to liquidate and to discontinue its activities.
 Unique purpose Financial Statements and might not be produced
according to financial reporting system for which accounting basis of
significance is applicable – for example for those financial reports
produced on a tax-based basis in specific jurisdictions, accounting basis
of consideration is not appropriate (Guo, Delaney and Ahmed, 2020).

Accounting
 If it is adequate to exercise an aggressive duty framework to recoup the funds
of accounting, it can hold as many assets and obligations registered on the
grounds that individuals and obligations will accounts and offer complete
vengeance in the usual courses of business of company.
 Any financial reporting systems specifically mandate management to evaluate
the corporation's capacity for continued business and criteria for issues to
recognize and disclosure requirements relevant to existing concerns. In
specific, manager's obligation to determine their ability to maintain in the
form of the company as a matter and relevant financial records can also be
laid down in laws or regulations. Comprehensive provisions concerning
management's obligation to determine the potential of the company to
continue as issue may be laid down in the Legislation.

Factor affecting auditor
Although the possible influence of inherent restrictions on auditors'
identification of material misunderstandings in future situations or incidents
that may lead an individual to stop as an on-going issue, as defined in ASA
200, is larger. These future occurrences or circumstances cannot be predicted
by auditor.
Therefore, the unavailability of any counterpoint in auditor' s report to
material uncertainty of ability of the organization to remain an ongoing
problem cannot be regarded as an assurance that the organization can sustain
to be involved. The auditing personnel will determine whether there are any
incidents or circumstances which could create considerable uncertainty on the
potential of the company to proceed as a continuing issue when undertaking
the risk management procedures as prescribed under ASA 3153.

Cont...
Thus, auditor shall assess if management has undertaken a prior
evaluation as to entity's continued ability as a matter of interest, and if this
evaluation has been carried out the auditor must review with management to
decide whether or not the manager has found incidents and situations that
could pose serious concerns, either individually or under groups.
Or, where such an evaluation has not yet been made, auditor shall
determine with management on basis of certainty of use of a current
accounting framework as intended by its examination and check for
managerial characteristics because there exist incidents or circumstances that
could create substantial uncertainty, either person and jointly, on entity's
capacity to proceed as an ongoing issue (Hossain, Chapple and Monroe,
2018).

Flow of information
Where incidents and circumstances have been established that may give rise
to substantial doubt regarding an firms' ability to proceed as going concern,
auditor shall receive adequate audit information for deciding whether
material problem persists or does not exist with respect to events or situations
that may bring substantial doubt upon the entity's capacity to carry on as
going concern.
The following protocols shall involve where governance hasn't really
assessed the capacity of the organization to continue as concern, management
demands its evaluation. Evaluation of managerial plans for potential steps
pertaining to the consideration of their existing issues, whether the result of
these strategies is prone to alter the condition and if management initiatives in
situations are practicable.

Cont...
Where cash flows forecast has been planned and the prediction is an important
feature in the calculation of potential effects of incidents or circumstances in
management plan review for future acts: Or, where such an evaluation has still not
been made, auditor shall determine with management on basis of certainty of
use of a current accounting framework as intended by its examination and check
for managerial characteristics because there exist incidents or circumstances that
could create substantial uncertainty, either person and jointly, on entity's capacity
to proceed as an ongoing issue.
The auditor should assess the reasonableness of executive's use of current
accounting issue basis in planning financial statements and shall determine on the
grounds of the satisfactory audit facts collected (Sánchez-Medina, Blázquez-
Santana and Alonso, 2019). The auditor concludes, based on audit facts collected,
whether there is substantial ambiguity in the auditor's assessment as regards
incidents and circumstances that could create considerable suspicion individually
or in groups on its capacity to remain an issue.

CONCLUSION
 For instance, AASB 101 deals with the question of the capacity of public areas
to proceed as regards concerns of public sector9 In the event that government
funding may be decreased or eliminated or that privatization could be necessary
there could be threats, but not just such circumstances where public sector
organizations work on a profitable basis. In cases where public sector
organization has no support for its persisted life or where regulatory actions
concerning the services rendered by public sector entity might be an occurrence
or circumstance that would give an essential doubt on entity's capacity to proceed
as a continuing public sector issue.

References
Guo, Y., Delaney, D. and Ahmed, A., 2020. Is an Auditor's Propensity to Issue Going
Concern Opinions a Valid Measure of Audit Quality?. Australian Accounting Review.
Hossain, S., Chapple, L. and Monroe, G.S., 2018. Does auditor gender affect issuing
going‐concern decisions for financially distressed clients?. Accounting & Finance,
58(4), pp.1027-1061.
Sánchez-Medina, A.J., Blázquez-Santana, F. and Alonso, J.B., 2019. Do auditors
reflect the true image of the company contrary to the clients’ interests? An artificial
intelligence approach. Journal of Business Ethics, 155(2), pp.529-545.
Online:
Auditing Standard ASA 570 Going Concern. 2020. Available through:
<https://www.auasb.gov.au/admin/file/content102/c3/ASA_570_Compiled_2020>