Wiley Practitioner's Guide to GAAS 2015: Covering all SASs, SSAEs, SSARSs, PCAOB Auditing Standards, and Interpretations

AU-C 570 The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern

AU-C ORIGINAL PRONOUNCEMENT

Original Pronouncement

Statement on Auditing Standards (SAS) 126.

AU-C DEFINITION OF TERM

Source: AU-C 570.07

Reasonable period of time. A period of time not to exceed one year beyond the date of the financial statements being audited.

OBJECTIVES OF AU-C SECTION 570

AU-C Section 570.06 states that:

… the objectives of the auditor are to

1. evaluate and conclude, based on the audit evidence obtained, whether there is substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time;
2. assess the possible financial statement effects, including the adequacy of disclosure regarding uncertainties about the entity's ability to continue as a going concern for a reasonable period of time; and
3. determine the implications for the auditor's report.

NOTE: The Statement applies in the audit of any type of entity. It is applicable to both profit-making and not-for-profit organizations. Thus, it would apply, for example, in the audit of a municipality. Also, the Statement applies to financial statements prepared using a general-purpose or special-purpose framework. However, it does not apply to liquidation-basis financial statements. (AU-C 570.01)

FUNDAMENTAL REQUIREMENTS

Auditor's Responsibility

The auditor should evaluate whether there is substantial doubt about the entity's ability to continue as a going concern ...