Impact of Covid-19 on Going Concern Part 2

01Impact of Covid-19 on Going Concer Part 2

Going Concern

Going concern is an accounting term for a company that is financially stable enough to meet its obligations and continue its operation.

Auditor wants to know whether the company’s going concern is affected by COVID-19.

Auditing Standard Going Concern

ISA 570 (Revised), Going Concern, requires auditors:

(a) To obtain sufficient appropriate audit evidence regarding, and conclude on, the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial statements;

(b) To conclude, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern; and

(c) To report in accordance with this ISA.

Consideration on Ahe Audit under Covid 19

• The company’s liquidity over the duration of Covid-19 and after.
• Any breach of financing terms.
• Deferral of financing repayments and the use of available government subsidies and other support
• The impact of Covid-19 in the overall operations of the company

Disclosure Note

The financial statements should not be prepared on a going concern basis where events after thereporting date indicate that the going concern assumption is no longer appropriate.

If management concludes that the going concern basis is appropriate, but it is aware of materialuncertainties related to events or conditions that may cast significant doubt upon the entity's ability to continue as a going concern, it should disclose :

• those uncertainties;
• management’s plans to deal with these events or conditions

that there is a material uncertainty related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern and, therefore, that it might be unable to realise its assets and discharge its liabilities in the normal course of business.

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