Companies that are a going concern may defer reporting long-term assets until a more appropriate time, such as in an annual reportas opposed to quarterly earnings. A company remains a going concern when the sale of assets does not impair its ability to continue operation, such as the closure of a small branch office that reassigns the employees to other departments within the company. Accountants may also employ going concern principles to determine how a company should proceed with any sales of assets, reduction of expenses or shifts to other products.
Financial audit It is important to note that auditor reports on financial statements are neither evaluations nor any other similar determination used to evaluate entities in order to make a decision. The report is only an opinion on whether the information presented is correct and free from material misstatements, whereas all other determinations are left for the user to decide.
There are four common types of auditor's reports, each one presenting a different situation encountered during the auditor's work. The four reports are as follows: Unqualified Opinion[ edit ] An opinion is said to be unqualified when he or she does not have any significant reservation in respect of matters contained in the Financial Statements.
The most frequent type of report is referred to as the "Unqualified Opinion", and is regarded by many as the equivalent of a "clean bill of health" to a patient, which has led many to call it the "Clean Opinion", but in reality it is not a clean bill of health, because the Auditor can only provide reasonable assurance regarding the Financial Statements, not the health of the company itself, or the integrity of company records not part of the foundation of the Financial Statements.
It is the best type of report an auditee may receive from an external auditor.
An Unqualified Opinion indicates the following — 1 The Financial Statements have been prepared using the Generally Accepted Accounting Principles which have been consistently applied; 2 The Financial Statements comply with relevant statutory requirements and regulations; 3 There is adequate disclosure of all material matters relevant to the proper presentation of the financial information subject to statutory requirements, where applicable; 4 Any changes in the accounting principles or in the method of their application and the effects thereof have been properly determined and disclosed in the Financial Statements.
The report consists of a title and header, a main body, the auditor's signature and address, and the report's issuance date. US auditing standards require that the title includes "independent" to convey to the user that the report was unbiased in all respects.
Traditionally, the main body of the unqualified report consists of three main paragraphs, each with distinct standard wording and individual purpose.
Nonetheless, certain auditors including PricewaterhouseCoopers  have since modified the arrangement of the main body but not the wording in order to differentiate themselves from other audit firms, even though such modification is contrary to the clarified US AICPA standards on auditing.
The first paragraph commonly referred to as the introductory paragraph states the audit work performed and identifies the responsibilities of the auditor and the auditee in relation to the financial statements. The second paragraph commonly referred to as the scope paragraph details the scope of audit work, provides a general description of the nature of the work, examples of procedures performed, and any limitations the audit faced based on the nature of the work.
This paragraph also states that the audit was performed in accordance with the country's prevailing generally accepted auditing standards and regulations. The third paragraph commonly referred to as the opinion paragraph simply states the auditor's opinion on the financial statements and whether they are in accordance with generally accepted accounting principles.
Note that this report is acceptable only for periods ending before December 15, These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the country where the report is issued.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.LensOnNews, the best online source for news, analysis and opinion on India; also features the best commentary on business, economy and world affairs.
A going concern, also known as a going concern assumption or going concern principle, is an accounting assumption stating that a business will stay in operation for the foreseeable future.
In essence, that means that there is no threat of liquidation for the foreseeable future which is usually perceived as a period of time lasting for 12 months. the going concern basis of accounting, but rather under the liquidation basis of accounting in accordance with ASC , must have approved the plan before the issuance date Management should further assess its plans (that are probable of effective.
CPAs reconsider the “going concern” assumption every time they audit financial statements. When the long-term viability of a borrower is doubtful, it may cause the CPA to issue a qualified audit opinion — or, worse, to withdraw from the job altogether.
A going concern is a business that functions without the threat of liquidation for elements that are particularly significant to overcoming the adverse effects of the conditions and events and should plan and perform auditing procedures to obtain evidential matter about them. The fear is that a going-concern opinion can hasten the.
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