Management’s going concern assessment
As your auditor, Buzzacott is required to obtain your “going concern assessment”. This may be a formal document or a more informal statement to the auditor expressing why management believes that the entity being audited is a going concern.
Your assessment should consider if there are any circumstances that may cast significant doubt on the entity's ability to continue as a going concern.
The assessment may include review of cash flow forecasts and budgets as well as your consideration of options such as bank loans or other sources of finance if the entity is not able to generate sufficient cash from normal operations.
Although there is no requirement for you to have a formal going concern document, the ISA states “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.” We therefore recommend that a written assessment is prepared prior to your audit ready for the audit team to assess using the new ISA requirements. Preparing this in advance of the audit will help avoid any delays during this critical part of the audit process.