Page 110 - Auditinf Electronic System

The significance of such events or conditions often can be mitigated by other
factors. For example, the effect of an entity being unable to make its normal debt
repayments may be counter-balanced by management’s plans to maintain
adequate cash flows by alternative means, such as by disposing of assets,
rescheduling loan repayments, or obtaining additional capital. Similarly, the loss
of a principal supplier may be mitigated by the availability of a suitable
alternative source of supply.

This assessment will then impact the audit plan and the nature, timing, and
extent of audit procedure (it`s effect on audit risk model)
Third phase: Field work Phase:

If events or conditions have been identified that may cast significant doubt on
the entity’s ability to continue as a going concern, the auditor shall obtain sufficient
appropriate audit evidence to determine whether or not substantial doubt or a
material uncertainty exists through performing additional audit procedures related
to these events, including consideration of mitigating factors.

These procedures shall include:

• Analyzing and discussing cash flow, profit and other relevant forecasts with
management.

• Analyzing and discussing the entity’s latest available interim financial
statements.

• Reading the terms of debentures and loan agreements and determining whether
any have been breached.

• Reading minutes of the meetings of shareholders, those charged with
governance and relevant committees for reference to financing difficulties

• Inquiring of the entity’s legal counsel regarding the existence of litigation and
claims and the reasonableness of management’s assessments of their outcome
and the estimate of their financial implications.

• Confirming the existence, legality and enforceability of arrangements to
provide or maintain financial support with related and third parties and assessing
the financial ability of such parties to provide additional funds.

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‫جميع الحقوق محفوظة ـ الإعتداء على حق المؤلف بالنسخ أو الطباعة يعرض فاعله للمسائلة القانونية‬