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Rahul Sangwan asked 1 year ago
1 Answers
RaviRavi Staff answered 1 year ago

Sorry for the delay in reply. I was stuck in an important issue.
 
We saw in SA 570 that the first step is  to look for the events or condition which creates significant doubts over  going concern.These things are like indications .
For Example -Companies incurring losses for few years , it is a indication , current asset ratio is bad it is a indication that there can be problem with going concern .
So we perform step number 2 , i.e we perform additional procedures and we try to find out weather going concern is really in problem . When we see that there are certain uncertainties which may  lead to failure of going concern because of which going concern can become invalid, then that is called as material uncertainty .
But if material uncertainties is mitigated or  compensated by mitigating factors then going concern will still survive, that means if material uncertainty is compensated by mitigating factor going concern is still valid ,if material uncertainty is not mitigated is not compensated  it will lead to going concern become invalid. So please try to understand one thing  going concern can remain valid  with or without material uncertainty . If material uncertainty is properly mitigated going concern is positive. If it is not properly mitigated going concern will be invalid.
Step 1
Look for indication creating doubts over going concern.
Step 2
Perform additional procedures and see whether there are material uncertainties w.r.t going concern and are they mitigated.
Step 3
Make final conclusion.
If material uncertainties are mitigated – Going Concern is valid
If not mitigated – Going Concern is invalid
If it is not yet clear you can ask more doubts on it.

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