Auditing and Assurance: ASA 570 Going Concern and its Impact

This report provides a comprehensive analysis of Auditing Standard ASA 570, focusing on the going concern assumption in financial statements. It explains the auditor's responsibilities in assessing a company's ability to continue as a going concern, emphasizing the need to gather sufficient audit evidence and evaluate management's assessment of the entity's future. The report details the procedures auditors should undertake, including evaluating management's plans, reviewing cash flow forecasts, and assessing the impact of events and circumstances that may cast significant doubt on the company's ability to operate. The report also addresses the implications of the going concern assumption on financial reporting and the auditor's reporting responsibilities, including the need to disclose material uncertainties. The report also provides references to relevant literature and online resources, including the Australian Auditing and Assurance Standards Board (AUASB) and academic journals, which provide further context and support the analysis.

Auditing and Assurance

Contents
ASA 570 Going Concern.................................................................................................................3
REFERENCES................................................................................................................................6

ASA 570 Going Concern
The financial statements are generated 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). 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. It is the duties
of the auditing personnel to collect satisfactory audit information on the suitability of managerial
usage of accounting issue basis in the preparing financial statements, and to determine,
depending upon the auditing evidence collected, whether there is significant doubt with respect
to entity 's potential to proceed as a matter of consideration. These roles exist even though there
is no clear obligation for managers to determine the capacity of the company to operate as a
continuing issue in Financial Reporting process utilized to formulate the Financial Results
(Auditing Standard ASA 570 Going Concern. 2020).
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 organisation to remain an ongoing problem cannot
be regarded as an assurance that the organisation 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. 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).
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 organisation 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. 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. A substantial uncertainty occurs when the degree and possibility of
its possible effect was certain that from auditor's point of view, an effective disclosing of the
existence and effects of uncertainty is required for: When financial reporting structure with fair
presentation is presented, fair presentation of financial statements or financial report should not
be deceptive in the event of compliance framework. The use of current accounting market basis
is therefore important for public sector agencies. 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 privatisation could be necessary
there could be threats, but not just such circumstances where public sector organisations work on
a profitable basis. In cases where public sector organisation 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
Books and Journals:
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>