Page 33 - Inspection Report 2018

Going Concern

In light of the local and global economic volatility, one of the thematic areas of focus in the AOB’s
2018 Inspection Programme was in relation to the auditors’ assessment on Going Concern of their clients.

diagram 7
Analysis of Engagements reviewed under Going Concern Thematic reviews in 2018

Engagements reviewed ISA 570 Going Concern requires

3 engagements 3 engagements auditors to consider whether events
from 3 Major from 3 Other or conditions exist that may cast
Audit Firms Audit Firms significant doubt on an entity’s ability
to continue as a going concern.
Where events or conditions exists,
results giving rise to material uncertainties
related to going concern (MUGC),
2 files with the auditors would need to ascertain
findings on Going that sufficient disclosures have been
Concern made in the financial statements.

Source: AOB

As shown in Diagram 7, out of 6 engagements selected for inspection in 2018, 2 had findings on going
concern. Common findings noted from these 2 engagement files are:

Common Findings

• Insufficient audit procedures performed to evaluate the appropriateness of management’s going
concern assumption applied in the preparation of the financial statements as the auditors tend
to accept management’s representations without obtaining sufficient evidence to support such
representations.

• No audit procedures performed to verify the overall cash flows, particularly the reliability of
underlying data and reasonableness of assumptions used by management when preparing cash flow
and other forecasts, which was used in the evaluation of the going concern assumption.

• No audit procedures performed to verify management’s representation that financial support was
available to support the going concern assumption.

AUDIT OVERSIGHT BOARD
ANNUAL INSPECTION REPORT 2018 31

83806_Inside_NEW.indd 31 5/28/19 3:02 PM