Going concern short notes

Auditing and Assurance Revision Questions and Answers

Answer
The financial statements are normally prepared on the assumption that an enterprise is a going concern and will continue in operation for the foreseeable future. Hence, it is assumed that the

enterprise has neither the intention nor the need to liquidate or curtail materially the scale of its operations; if such an intention or need exists, the financial statements may have to be prepared on a different basis and, if so, the basis used is disclosed. As per NSA 570, the auditor is required to assess the going concern assumption of the entity and also NSA 700 specifically requires the auditor to report separately regarding the going concern issues identified during the course of audit.



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