ACCA AAA ^INT Syllabus E. Completion, Review and Reporting - Going Concern Responsibilities - Notes ^{4 / 5}

Going concern is defined under IAS 1 as the assumption that the company will continue in operational existence for the foreseeable future

Some Key Issues:

1. Foreseeable Future

   • This isn't defined :(

   • but is generally accepted to be at least one year into the future

   • and further if specific business reasons make it appropriate

2. Use of Judgement

   • GC involves the use of judgement on the basis of the information available at the time

3. Break up basis

   This is when GC basis is not appropriate

   • This values assets at their sale value and inventory at NRV

Director's Responsibility

• They must assess going concern

• They should use a suitable basis on which to base the going concern

• They should use information on sources of finance, future profitability and repayment of debt

If the directors have any material uncertainties as to the going concern of the business they must disclose them in the financial statements.

Auditors Responsibility

• They must assess the appropriateness of the going concern assumption

If there are going concern issues, the auditor must ensure that sufficient disclosures are made