Auditors play a critical role in addressing going concern issues for a company. The going concern concept refers to the assumption that a company will continue to operate for the foreseeable future, allowing it to meet its obligations and commitments. When there are indications that a company may not be able to continue as a going concern, auditors are responsible for evaluating the company’s ability to continue operations and assessing the risk of the company’s failure.
The role of auditors in addressing going concern issues includes the following:
- Evaluating Management’s Assessment: Auditors first evaluate the management’s assessment of the company’s ability to continue as a going concern. They review the management’s financial forecasts, budgets, and business plans, as well as any other relevant information to determine whether there are any indications of financial distress or the risk of the company’s failure.
- Identifying and Evaluating Going Concern Issues: Auditors then identify and evaluate any going concern issues that they identify during their review. This includes reviewing the company’s financial statements, examining the company’s cash flow projections, and reviewing any relevant market conditions or other factors that could impact the company’s ability to continue operating.
- Providing an Opinion: After evaluating the going concern issues, the auditors provide an opinion on whether the company can continue as a going concern. If the auditors conclude that there are significant doubts about the company’s ability to continue as a going concern, they may include an emphasis of matter or a qualified opinion in the audit report.
- Communicating with Stakeholders: Finally, auditors are responsible for communicating with stakeholders, including shareholders, creditors, and other interested parties, about any going concern issues that they identify. This includes discussing any significant risks or uncertainties that could impact the company’s ability to continue as a going concern and any actions that management is taking to address these issues.
Overall, auditors play a critical role in addressing going concern issues by evaluating the company’s ability to continue as a going concern and providing an opinion on the company’s financial statements. This helps to ensure that investors and other stakeholders have accurate and reliable information about the financial health of the company.
About the Author
Dr. Dawkins Brown is the Executive Chairman of Dawgen Global , an integrated multidisciplinary professional service firm .
Dr. Brown earned his Doctor of Philosophy (Ph.D.) in the field of Accounting, Finance and Management
He has over Twenty Six (26) years experience in the field of Audit, Accounting, Taxation, Finance and management . Starting his public accounting career in the audit department of a “big four” firm (Ernst & Young), and gaining experience in local and international audits, Dr. Brown rose quickly through the senior ranks and held the position of Senior consultant prior to establishing Dawgen.
He is a member of Chartered Management Institute (CMI), member of the Institute of Internal Auditors (IIA) , member of the Association of Certified Fraud Examiners (ACFE), member of Information Systems Audit and Control Association ( ISACA ) member of American Planning Association (APA) , member of the American Finance Association (AFA) and member of Association of Certified E-Discovery Specialists (ACEDS).
As Executive Chairman of Dawgen Global , he is responsible for the strategic guidance and strategy execution of several entities within the Dawgen Global Group.
