The IAASB staff released a new practice alert to help auditors and management in addressing the challenges of the credit crises.
The IAASB staff released a new practice alert to help auditors and management in addressing the challenges of the credit crises. The alert was developed following consultation with the IAASB and a review of similar guidance issued by national standard setters.
Management, those charged with governance and auditors alike must consider the effect of the credit crisis and economic downturn on an entity’s ability to continue as a going concern and whether these effects ought to be described in the financial statements.
The alert highlights areas within International Standard on Auditing (ISA) 570, Going Concern, as well as other ISAs, that are particularly relevant in the current economic environment and provides additional guidance for auditors in evaluating management’s use of the going concern assumption.
It also raises awareness of issues surrounding liquidity and credit risk that may create new uncertainties for entities or exacerbate those already existing.
Audit Practice alert
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