Ability to Continue as a Going-Concern

Auditors required to consider whether evidence obtained during audit raises questions about ability to continue as a going concern.

If concerns exist, evaluate management’s plans to mitigate.

• If concerns do not remain: No effect on report or financial statements.

• If concerns remain: Ensure proper use of going concern basis of accounting and modify auditors’ report.

Adjusting Entries and Financial Statement Disclosure

Accumulate dollar effects of identified misstatements.

Evaluate materiality.

• Rollover method considers the current period income effect(s) of misstatements.

• Iron curtain method considers the aggregate effect of the adjustments on the entity’s balance sheet.

• SAB 108 requires adjustments to be proposed if material under either approach.

Recommend adjustment of all misstatements identified.

Carry any uncorrected misstatements forward for consideration in future audits.

Communicate all adjustments and misstatements to audit committee or individuals charged with governance.

Audit Documentation Review

Audit supervisor:

• Have all steps in audit plan been performed?

• Is referencing among documentation clear?

• Are explanations understandable?

Audit manager and partner:

• Is the overall scope of the audit adequate?

• Do overall conclusions support the opinion?

Reviewing partner:

• Is the quality of audit work and reporting consistent with quality standards of the firm?

• Engagement quality review.