ICAI’s Implementation Guide on ‘Revised SA 570: Going Concern’

ICAI has released Implementation Guide on ‘Revised SA 570: Going Concern’, for guidance of Members. This guide comprises of responses on key issues of revised SA 570 in question answer format, including checklists, practical case studies, illustrative auditor’s report formats, etc.

ICAI’s Implementation Guide on ‘Revised SA 570: on Going Concern’

This Implementation Guide of ICAI explains about the principles laid down in ‘Revised SA 570: Going Concern’, which is applicable for audits of financial statements for periods beginning on or after 01/04/2017.

Certain fundamental accounting assumptions underlie the preparation of financial statements and going concern is one of those fundamental accounting assumptions. They are usually not specifically stated because their use is accepted and assumed. A disclosure is necessary if they are not followed.

However, when the use of the going concern basis of accounting is not appropriate in the circumstances, management may be required, or may elect, to prepare the financial statements on another basis (e.g., liquidation basis). The auditor may be able to perform an audit of those financial statements provided that the auditor determines that the other basis of accounting is acceptable in the circumstances. The auditor may be able to express an unmodified opinion on those financial statements, provided there is adequate disclosure therein about the basis of accounting on which the financial statements are prepared but may consider it appropriate or necessary to include an Emphasis of Matter paragraph in accordance with Revised SA 706, in the auditor’s report to draw the user’s attention to that alternative basis of accounting and the reasons for its use.

Related Posts:

ICAI’s FAQs on ‘Revised SA 570: Going Concern’

ICAI’s Standards on Auditing (SA, SQC, AROS/ AAS, SRE, SAE, SRS)

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