Evaluating Management’s AssessmentEvaluating Management’s Assessment

Evaluating Management’s Assessment

1. Where management has not yet performed an assessment of the entity’s ability to continue as a going concern, the auditor shall request management to make its assessment. If management is unwilling to make its assessment, the auditor shall consider the implications for the audit. (Ref: Para. A33)
2. The auditor shall design and perform audit procedures to evaluate management’s assessment of the entity’s ability to continue as a going concern, including the significant judgements on which management’s assessment is based. (Ref: Para. A34–A36)
3. In designing and performing the audit procedures required by paragraph 17, the auditor shall do so in a manner that is not biased towards obtaining audit evidence that may be corroborative or towards excluding audit evidence that may be contradictory. (Ref: Para. A37)

Method, Significant Assumptions and Data Used in Management’s Assessment

1. The audit procedures required by paragraph 17 shall include evaluating the method, significant assumptions and data used by management in assessing the entity’s ability to continue as a going concern. In determining the nature and extent of such audit procedures, the auditor shall take into account the results of the risk assessment procedures performed. Such audit procedures shall address: (Ref: Para. A35, A38, A46)
   1. The method used by management to assess the entity’s ability to continue as a going concern, including whether the: (Ref: Para. A39)
      1. Method selected is appropriate in the context of the applicable financial reporting framework, and, if applicable, changes from the method used in prior periods are appropriate; and (Ref: Para. A40)
      2. Calculations, if applicable, are applied in accordance with the method and are mathematically accurate. (Ref: Para. A41)
   2. Whether the significant assumptions on which management’s assessment is based are: (Ref: Para. A42)
      1. Appropriate in the context of the applicable financial reporting framework, and, if applicable, changes from prior periods are appropriate; and
      2. Consistent with each other and with related assumptions used in other areas of the entity’s business activities, based on the auditor’s knowledge obtained in the audit.
   3. Whether the data is:
      1. Relevant and reliable; and (Ref: Para. A43–A44)
      2. Appropriate in the context of the applicable financial reporting framework, and, if applicable, changes from prior periods are appropriate. (Ref: Para. A45)

Period Beyond Management's Assessment

1. The auditor shall enquire of management as to its knowledge of events or conditions beyond the period of management’s assessment that may cast significant doubt on the entity’s ability to continue as a going concern. If management or the auditor identifies such events or conditions, the auditor shall request management to evaluate the potential significance of the events or conditions on its assessment of the entity’s ability to continue as a going concern. (Ref: Para. A47–A49)