Going concern in doubt undertake additional audit procedures 1 Assess cash flow

Going concern in doubt undertake additional audit

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Going concern in doubt, undertake additional audit procedures 1. Assess cash flow, revenues, expenses, interim results 2. Review debt contracts, board meeting minutes 3. Discussions with client management and lawyers Then..
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9/12/2017 18 CONSIDER FACTORS THAT MITIGATE (REDUCE) GOING CONCERN RISK Letter of guarantee from parent company Availability of assets or segment of business for sale for cash Ability to raise funds through share issue or borrowing. Consider adequacy of client disclosures in financial statement about going concern issues Why an auditor need to consider (fraud, going concern etc) at planning stage?
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9/12/2017Will the audit strategy be different for a high risk and low risk client? 19 AUDIT STRATEGY FOR HIGH RISK CLIENT Audit risk = f Inherent Risk Control Risk Detection Risk High High Low Audit strategy No (or very limited) tests of controls Increased reliance on substantive tests of transactions and account balances AUDIT STRATEGY FOR LOW RISK CLIENT Audit risk = f Inherent Risk Control Risk Detection Risk Low Low High Audit strategy Increased reliance on tests of controls Reduce reliance on substantive tests of transactions and account balances
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9/12/2017What’s the relationship between inherent risk, control risk, detection risk and audit risk? 20 X . Audit Risk The risk that the auditor expresses an inappropriate audit opinion when a financial statements is materially misstated. Audit Strategy The determination of the amount of time spent testing the client’s internal controls and conducting detailed testing of transactions and account balances. AUDIT RISK & AUDIT STRATEGY
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9/12/2017What type of risk is within the control of the auditor?What else auditor has to do during risk assessment stage? 21
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