Part (c) for 6 marks required audit procedures to assess if Medimade Co was a going concern. This question was satisfactorily answered by most candidates.

Many had a reasonable attempt at this question and generated some satisfactory tests such as obtaining a management representation on going concern and reviewing cash flow forecasts, however there were also a number of unsatisfactory tests provided.

Common errors included:

• Providing procedures which were based upon the year that had passed rather than the coming 12 months 
• Requesting a written confirmation or a meeting with the bank to ascertain whether they would renew the overdraft facility, this is unrealistic. 
• Lack of detail in the going concern procedure, such as “review board minutes” without an explanation of what to look for. 
• Lack of variety of procedures, many tests started with “discuss with management”.