Audit and Accountability. Questions and answers Essay

Audit and Accountability. Questions and answers - Essay Example Under the accounting standards directors are required to: a) Make an appraisal regarding the ability of the company to carry on as a going concern; and b) To make sure, about the uncertainties regarding a company’s ability to carry on as a going concern. These are sufficiently revealed in the financial statements. Directors should also- 1. Apply a suitable degree of rigidity and procedure while making their conclusions to decide whether the business is feasible in going ahead with its objectives. 2. To plan assessment as early as possible, to keep the auditor in preparing financial statements on basis of going concern. 3. Draft disclosures before time, if needed be. 4. Take account of subsequent developments before time and not just on the financial reporting date or yearend date. The Auditor’s Responsibility: The responsibility of an auditor is †¢ To consider, the suitability of the management’s utilization of the assumption of going concern in preparing financial statement. †¢ To consider the going concern concept in the earlier stages of audit by considering the presence of events or situations and associated business risks that may cause doubt on the entity’s capability to maintain as a going concern.... b) You have recently completed the audit of stabler plc. You are involved with the financial statements but you have some doubts over the going concern status of the company. Explain in what circumstances your audit opinion would be relevant or qualified: i)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Qualified with an ‘adverse’ opinion I will convey an adverse opinion ?  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   When I have obtained adequate suitable audit evidence, to conclude that the misstatements, independently or in the total, are both pervasive and essential to financial report. ?  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   When it is incapable to acquire adequate suitable audit evidence on the basis of which opinion is formulated. ?  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Sometimes, relating to multiple uncertainties, despite of having attained adequate suitable audit evidence concerning each of the individual uncertainties, it is impossible to outline an opinion on financial report because of the possible interaction of the uncerta inties and their likely cumulative consequence on financial report. ii)  Ã‚  Ã‚  Ã‚   Qualified With an ‘except for’ Opinion Qualified with an ‘except for’ opinion is expressed when— a. There in adequate suitable audit evidence or if there are constraints on the scope of audit that leads me to the conclusion that I can’t express an unquali?ed opinion or disclaim an opinion. b. On account of the audit done, if the ?nancial statements enclose a departure from the GAAP (generally accepted accounting principles), the result of which will be material, i will conclude that it is not necessary to convey adverse opinion iii) Unqualified with an explanatory paragraph Audit opinion will be unqualified with an explanatory paragraph when: 1.  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  When there is â€Å"Lack of consistent application of generally