Going Concern

The auditor's objectives in relation to going concern
ISA 570 contains well-established guidance on going concern, including the following objectives for the auditor:
• to obtain sufficient appropriate audit evidence regarding the appropriateness of management's use of the going concern assumption in the preparation of the financial statements
• 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
• to determine the implications for the auditor's report.

All audits should involve an assessment of the appropriateness of the going concern assumption, and it is obvious to say that the auditor may well have to perform additional procedures when there are heightened risks relating to going concern, caused by difficult economic and market conditions. But going concern should be considered at all stages of the audit, not just in terms of specific procedures. It is important to remember that going concern is not just something considered at a particular stage in the audit cycle, but should be an issue that permeates the whole performance and review of an audit.
Auditors should consider the current economic circumstances and their impact on a particular audit when:
• assessing risk at the planning stage of the audit, and when re-assessing risk as the audit progresses
• designing and performing audit procedures to respond to the assessed risks
• evaluating and concluding on the results of audit procedure, and
• forming an audit opinion.

Assessing risk at the planning stage of the audit
Auditors are required by ISA 315, Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment, to gain an understanding of the audit client's