Explain going concern assessment.
A core Audit & Assurance interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
ISA 570: evaluate management’s assessment for 12+ months from FS date. Look for indicators (financial, operating, other). Test cash flow forecasts, review covenant compliance, read board minutes. If material uncertainty exists and adequately disclosed: unqualified opinion with GC section. If not disclosed: qualified or adverse.
WHAT INTERVIEWERS LISTEN FOR
- ✓ISA 570 standard
- ✓12-month assessment period
- ✓Indicators of going concern issues
- ✓Cash flow forecast testing
- ✓Disclosure and audit opinion impact
COMMON MISTAKES
- ✗Only 12 months from balance sheet date
- ✗Ignoring management's assessment
- ✗Confusing with liquidation basis
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