04-28-2004, 02:49 AM
<BLOCKQUOTE id=quote><font size=1 face="Verdana, Tahoma, Arial" id=quote>quote<hr height=1 noshade id=quote>"Without qualifying our opinion, we draw attention to note X in the financial statements which indicate that the company incurred a net loss of ZZZ during the year ended December 31, 20X1 and as of that date, company's current liablities exceed its total assets by ZZZ. These conditions along with other matters as set forth in Note X, indicate the existance of a material uncertainity which may cast significant doubt about the company's ability to continue as a going concern"
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ICAP has prescribed the two main causes which may cast signinficant doubt about the company's ability to continue as a going concern.
1.Net Loss during the year,
2.excess current liabilities than its total assets.
Now back to the question raised by Irfan meer, <BLOCKQUOTE id=quote><font size=1 face="Verdana, Tahoma, Arial" id=quote>quote<hr height=1 noshade id=quote>My question is if company's current liablity exceed its total assets but company is in profit than what should the auditor do whether to still insert emphasize<hr height=1 noshade id=quote></BLOCKQUOTE id=quote></font id=quote><font face="Verdana, Tahoma, Arial" size=2 id=quote>
In my opinion, in above situation the auditor should consider facts that whether the profit is operational or non-operational, and what are the chances that the company will not incurr any loss in forseable future, if the auditor gets some solid facts and ground that the company will now start earning profits in the future, then he can remove the matter of emphasis from his report,
provided, there are no other matters other than two above, which may cast doubt about the company to continue as going concern,
as the ICAP have also used the wording <b>These conditions along with other matters as set forth in Note X</b> so the auditor must consider those other matters before removing the emphasis para from the report.
The detail of Said matters are given by the ICAP in its "Audit Practices Manual" in the form of checklist named "Going Concern Review Checklist", and this checklist is in accordance with the ISAs.
SMR
<hr height=1 noshade id=quote></BLOCKQUOTE id=quote></font id=quote><font face="Verdana, Tahoma, Arial" size=2 id=quote>
ICAP has prescribed the two main causes which may cast signinficant doubt about the company's ability to continue as a going concern.
1.Net Loss during the year,
2.excess current liabilities than its total assets.
Now back to the question raised by Irfan meer, <BLOCKQUOTE id=quote><font size=1 face="Verdana, Tahoma, Arial" id=quote>quote<hr height=1 noshade id=quote>My question is if company's current liablity exceed its total assets but company is in profit than what should the auditor do whether to still insert emphasize<hr height=1 noshade id=quote></BLOCKQUOTE id=quote></font id=quote><font face="Verdana, Tahoma, Arial" size=2 id=quote>
In my opinion, in above situation the auditor should consider facts that whether the profit is operational or non-operational, and what are the chances that the company will not incurr any loss in forseable future, if the auditor gets some solid facts and ground that the company will now start earning profits in the future, then he can remove the matter of emphasis from his report,
provided, there are no other matters other than two above, which may cast doubt about the company to continue as going concern,
as the ICAP have also used the wording <b>These conditions along with other matters as set forth in Note X</b> so the auditor must consider those other matters before removing the emphasis para from the report.
The detail of Said matters are given by the ICAP in its "Audit Practices Manual" in the form of checklist named "Going Concern Review Checklist", and this checklist is in accordance with the ISAs.
SMR
