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Explain the directors’ responsibilities and the auditors’ responsibilities regarding financial statements prepared on the going concern principle.

      

Explain the directors’ responsibilities and the auditors’ responsibilities regarding financial
statements prepared on the going concern principle.

  

Answers


Wilfred
The directors’ responsibilities regarding going concern is to prepare the financial
statements of an entity ensuring that the going concern basis is reasonable. They
may also prepare cash and/or profit forecasts for at least 12 months into the future to
demonstrate that the entity is likely to continue to trade during this time.
The auditors’ responsibility regarding going concern is to form an opinion on the
appropriateness of management’s assessment of the going concern status of the entity
and the adequacy of disclosures, if any. The auditor will collect sufficient and appropriate
audit evidence to ensure use of the going concern assumption is valid. To be clear, the
auditors are not responsible for ensuring that the company is a going concern; this is a
responsibility of the directors.
Wilfykil answered the question on April 13, 2019 at 07:01


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