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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Completion and final review

At the completion stage of the audit of Dunmore Co, the auditor notes that the entity's customer base fell sharply after the reporting date. Management has not changed its going concern assessment. What is the auditor's most appropriate response?

The auditor treats the fall in customers as a possible going concern indicator and performs additional procedures, such as reviewing cash flow forecasts and management's plans, up to the date of the auditor's report. Ignoring it, withdrawing or modifying the opinion immediately would be premature.

  1. AIgnore the event because it occurred after the reporting date
  2. BTreat the event as a possible indicator and perform additional procedures, including considering cash flow forecasts and management's plans, until the date of the auditor's reportCorrect
  3. CImmediately withdraw from the engagement
  4. DModify the opinion on the basis that the customer decline is a material misstatement

Explanation

ISA 570 requires the auditor to remain alert to events or conditions up to the date of the auditor's report. A customer decline can cast doubt on going concern, so the auditor performs additional procedures such as reviewing forecasts and evaluating plans. Withdrawal or modification is premature before concluding on the evidence.

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