Case 12-08 Going, Going, Gone
For this case, please refer to PCAOB Auditing Standards related to going concern.
For #1: there are 4 concerning conditions, please list at least 2 and make sure to go into to detail as to why these conditions cause concern about the entity’s ability to continue as a going concern.Reviewing the example audit procedures from the applicable going concern auditing standard will help you to identify these conditions.
For #2: The next steps that the audit team perform come right out of the Auditing Standard. Please elaborate on your citings and also explain in your owns words why you are recommending these steps and how they will be critical in the auditor’s analysis about the entity’s ability to continue as a going concern.
For #3: A variety of answers will be accepted. Think about what you need to obtain from management, do you need to confirm or corroborate any information that you have obtained? What are management’s plans and how will you evaluate those forecasts? For each item in Appendix D, please list at least 2 forms of audit evidence or audit procedures. 1
For #4: Refer to the Auditing Standard to see what procedures should be performed during Interim and list them with an appropriate citation. Hint: this may not be in the going concern standard! Keep looking!