Page 123 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
• Loss of major market, key customers, franchise, license or
• Emergence of highly successful competitor
Other
Other
• Uninsured or underinsured catastrophes when they occur.
• Law related.
o Non-compliance with capital or other statutory requirements.
o Adverse change in law or govt policy or regulation
o Pending legal or regulatory proceedings against the entity that may if successful result in claims that
entity is unlikely to able to satisfy

(CNO-SA570.040) Step 2: - Additional Audit Procedures When Events or Conditions Are Identified
If doubts arise about an entity's ability to continue operating, the auditor must gather evidence and perform
extra procedures to determine if there is a material uncertainty, considering mitigating factors
Compulsory Audit Procedures
1. Management's assessment- Management's assessment if not prepared yet then requesting management to
make the assessment
2. Management's plan - Evaluating management's plans for future actions in relation to going concern
assessment, whether outcome of such plan is likely to improve the situation
3. Cash flow forecast- Where entity has prepared the CF forecast, analysis of forecast is a significant factor in
considering the future outcome of events or conditions in evaluating management plans for future actions
o Evaluate reliability of underlying data generated
o Determine whether adequate support for assumption underlying the forecast
4. Additional information- Consider whether any additional facts or information have become available since
the date on which management made it assessment
5. WR- Request WR from management & TCWG regarding plan for future actions & its feasibility

Optional if required
• Management & third-party plan (in sequence of power)
o Inquiring of entity's legal counsel regarding existence of litigation & claims and reasonableness of
management assessments of outcome and the estimate of their financial implications
o Obtain & review reports of regulatory actions
o Reading minutes of shareholders & TCWG
o Determine adequacy of support for any planned disposals of assets
o Reading terms of debentures and loan agreement & determine whether any have been breached
o Evaluate entity's plans to deal with unfilled customer orders
• Cash flow, Forecast & Interim FST
o Analysing & discussing CF, profit and other relevant forecasts with management
o Analysing & discussing latest interim FST
• Subsequent Event
o Perform audit procedures regarding SE to identify those that either mitigates or otherwise affect the entity
ability to continue as going concern
• WR from 3rd parties
o Confirming the existence, legality, and enforceability of arrangement with related and 3rd parties and
assessing the financial ability of such parties to provide additional funds
o Confirming the existing terms and adequacy of borrowing facilities

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