Nachiket PalsuleNachiket Palsule asked 3 months ago
3 Answers
RaviRavi Staff answered 3 months ago

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RaviRavi Staff answered 3 months ago

below is summary answer
Part I — Relevant Standards & Laws
SA 570 on “Going Concern,”
Part II — Requirements of Relevant Standards & Laws
Requirement of SA 570
Mitigating Factor: – E&C creating significant doubt can be mitigated by other Factors / Unable to Repay loan can be Mitigated by Mgt Plan to dispose assets, reschedule loan , alternative means / Loss of Principal Supplier mitigated by alternative source of raw material
 Part III – Case Discussion
Net worth Eroded / Creditors Unpaid / Expected loan from prompter’s wife / Negotiations for large export order
 Part IV – Conclusion
Mere expectation to get unsecured loan / Possibility of export order are without any firm commitment or contractual binding / not sufficient & appropriate evidence for being mitigating factor for resolving going concern
In this case, it is subjective, but prima-facie a mere expectation of future cash flows from the promoter’s wife without any firm commitment and the possibility of an export order being negotiated, may not that be sufficient appropriate audit evidence of mitigating factors for resolving the going concerns question under SA 570 “Going Concern”.

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