BAC_401_Audit_Practice_and_Investigations (1).doc

A the fixed assets will no longer be valued at cost

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a) The fixed assets will no longer be valued at cost less depreciation but at realizable value. They would no longer have a future benefit and therefore they become current assets because they are already for disposal. b) New liabilities may arise and have to be recognized for example, redundancy costs, closure costs and so forth. c) Long-term liabilities will become current liabilities as they will sundry crystallize. d) Intangible assets such as goodwill, copyrights, market franchises, trademarks, brand names and patent rights will lose their values. 1.4 Auditor’s Responsibility The auditor’s responsibility is to consider the appropriateness of the management’s use of the going concern assumption in the preparation of the financial statements, and consider whether there are material uncertainties about the ability’s to continue as a going concern that need to be disclosed in the financial statements. The auditor considers the appropriateness of management’s use of the going concern assumption even if the financial reporting framework used in preparation of the financial statements does not include an explicit requirement for the management to make a specific assessment of the entity’s ability to continue as a going concern. The auditor cannot predict future events or conditions that may cause an entity to cease to continue as a going concern. Accordingly, the absence of any reference to going concern uncertainty in an auditor’s report cannot be viewed as a guarantee as to the entity’s ability to continue as a going concern. 12
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1.4.1 Planning Considerations In planning the audit, the auditor should consider whether which may cast there are events or conditions which may cast significant doubt on the entity’s ability to continue as a going concern. The audit should remain alert for evidence of the events or conditions significant doubt on the entity’s ability to continue as going concern throughout the audit. The auditor should remain alert for evidence of events or conditions which may cast significant doubt on the entity’s ability to continue as a going concern throughout the audit. If such events or conditions are identified, the auditor should in addition to performing the procedures designed to assure that the going concern of entity is not threatened, consider whether they affect the auditor’s assessment of the components of risk. The auditor considers events and conditions relating to the going concern assumption during the planning process, because this consideration allows for more timely discussions with management, review of management’s plans and resolution of any identified going concern issues. In some cases, management may have already made a preliminary assessment at the early stage of the audit and therefore, the auditor reviews that assessment to determine whether management has identified events or conditions, which indicates the inapplicability of the going concern assumption, and management’s plans to address them.
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