● Payback period: The payback period calculates the length of time required to recoup the original investment. Payback periods are typically used when liquidity presents a major concern. ● Internal Rate of Return: The internal rate of return (or expected return on a project) is the discount rate that would result in a net present …
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● A rolling forecast is a report that uses historical data to predict future numbers and allows organizations to project future results for budgets, expenses, and other financial data based on their past results. This enables organizations to adapt plans and resource allocations based on changes in the economy, the industry, or the business. ● …
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Significant aspects to be kept in mind: ● Detailed information on the business of the company ● Major revenue sources ● Operational expenses ● Investments of the company ● Capital structure ● Major assets and liabilities Note: Students are advised to go through the Financial Statements and Annual reports of the specific company beforehand. Favorite
● Segmentation- Grouping of data having common attributes. Useful for areas like customer segmentation by customer type, geographical spread, etc. ● Data visualization- which includes graphical representation of the data across multiple dimensions and variables ● Trend analysis- showing whether the results are improving or not over time and drawing conclusions for further analysis and …
Have a brief knowledge of: ● Life stage of the company or its products/services ● Impact of government policies ● Recent project(s) launched by the company & its performance ● Any major event/catastrophe affecting the industry ● Any recent judgments impacting the industry Note: Students are advised to study the industry trends of the company. …
A general answer and a structured answer are given below – General Answer: Improving margins and profits is an important goal for any business, and there are several strategies that can be implemented to achieve this. Increase sales: One of the most straightforward ways to improve margins and profits is to increase sales. This can …
Variance commentaries can be on different aspects of a business such as: ● Costs ● Revenue ● Profit and Loss ● Expenses ● Efficiency In each of the above, the actuals are compared with the standard or targeted prices and thereafter reasons for variances are also analyzed. This helps the company to identify bottlenecks and …
Driver-Based Planning is an approach in which the key business variables which drive a company’s success are identified and used to forecast where the company is heading, with the results being used to produce plans and budgets. Essentially, it involves the linking of analytics data to the financial planning and budgeting process. The business drivers …
Budget vs. actual: compares actual financial results to budgeted or planned results. Variance analysis: explains the difference between budgeted and actual results. Cash flow: tracks the inflow and outflow of cash. Sales forecast: predicts future sales based on historical data and market trends. Financial modeling: uses mathematical techniques to forecast future financial performance. Key performance …
● The compound annual growth rate (CAGR) is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each period of the investment’s life span. ● The compounded annual growth rate (CAGR) is one of …
● Variance analysis is the actual difference between 2 data points. It is the process of examining each variance in detail and determining the reasons why the budget was not met. Variance analysis helps an organization to be proactive in achieving their business targets and helps in identifying and mitigating any potential risks which eventually …
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The inclusion of inventory in Current Ratio and its exclusion from the Quick Ratio is the key difference between the two. Favorite
An Asset to Turnover Ratio is an efficiency indicator which shows what multiple is turnover of the total assets employed in a business. Favorite
The role of Cash Flow lies in showing the movement of cash between two points of time. It shows where the cash had come from and where it was utilized. The Cash Flow Statement is an extremely effective tool for a business enterprise to determine: ▪ Whether the operations are resulting in cash generation. ▪ …
Long term debt may be defined as one which is used to fund the capital of a business. In other words, it is intended to be invested in long term assets, i.e., those assets which create revenue stream for the company. On the other hand, short term debt is one which is used primarily for …
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FSA is an extremely important tool for enabling the management to: ▪ Evaluate business performance on all the key parameters such as profitability, solvency, efficiency, and wealth building. ▪ Determine areas of concern; and ▪ Take corrective action. Favorite
Working capital is the excess of current assets over current liabilities. In other words, it is the money invested in those assets of a business which are intended to be converted into cash in the ordinary course of business. In calculating the working capital, we add up all the current assets such as inventory, receivables, …
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A financial instrument in a company that is near or is currently going through bankruptcy. This usually results from a company’s inability to meet its financial obligations. As a result, these financial instruments have suffered a substantial reduction in value. Distressed securities can include common and preferred shares, bank debt, trade claims (goods owed) and …
Credit risk is the risk taken by a bond investor that the bond’s issuer will default by failing to pay interest and repay principal on schedule. Favorite
A sudden drop in the general availability of loans or a sudden increase in the cost of borrowing from banks is known as a credit squeeze. Favorite
A loan-to-value (LTV) ratio is an equation that lenders use to assess the amount of risk associated with a loan. In other words, how much loan borrower is getting against its mortgaged property. An LTV of 80% means borrower is getting 80% of its property value as loan amount. Favorite
Net worth is the amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure of how much an entity is worth. A consistent increase in net worth indicates good financial health. Favorite
Your debt-to-income ratio (DTI) is a measure of your monthly debt compared to your monthly income, calculated by your monthly debt divided by your monthly gross (pre-tax) income. DTI is one of the factors used to determine how much you can afford in a monthly EMI payment. Favorite
A down payment is the amount of cash you pay upfront toward the purchase of a home. It’s often expressed as a percentage of the selling price of a home—typically 5–20% depending on the type of loan. The difference between your down payment and the price of the home is what you finance with a …
Two categories of credit facilities exist: Quick loans, primarily for working capital requirements. Overdraft, letter of credit, factoring, export credit, and other short-term loans are only a few examples. Loans with a long duration are necessary for purchase or capex. It covers bridge loans, mezzanine loans, bank loans, notes, and securitization. Favorite
There is no fair debt-capital ratio because it might vary from business to business. For new businesses, the debt would be little or non-existent. Therefore, the debt-to-capital ratio for start-ups would be in the range of 0 to 10%. But when it comes to small enterprises, the debt-to-capital ratio is a little higher, hovering between …
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By examining the outstanding debts of a company, credit agencies assist the market evaluate the creditworthiness of that company. However, it wouldn’t be wise to put all your faith on credit rating companies’ ratings. To determine whether to issue a loan to a company, we must consider both its risk profile and the ratings from …
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There are numerous things I would consider. First, examine the company’s financial performance over the last five years by looking at all four financial statements. Then consider the overall assets, and see what resources are available for use as collateral. Additionally, learn how the company has been using its resources. Next, determine whether the cash …
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One of the most significant interview questions for credit analysts is this one. A business must pay interest when it takes on debt. The interest coverage ratio demonstrates to the business their ability to handle their interest costs. Interest Coverage Ratio = [EBIT / Interest Expense] The greater the ratio better would be the company’s …
DSCR = Net Operating Income / Total Debt Service Where total debt service is annual principal + interest payment to be made DSCR ratio gives an idea of whether the company can cover its debt-related obligations with the net operating income it generates. If DSCR>1, it means that the company is generating enough operating income …
Though it might sound complicated, underwriting simply means that your lender verifies your income, assets, debt, and property details to issue final approval for your loan. Underwriting happens behind the scenes, but that doesn’t mean you won’t be involved. Your lender might ask for additional documents and answers, such as where bank deposits came from, …
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Your answer to this question, tells the interviewer, if you are aware of the responsibilities you’ll need to perform in this role, your capability, readiness, and commitment. Make sure that you have read the job description well and are prepared to answer the questions. Some of the things that you can talk about are: ▪ …
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These two are very commonly confused positions. The two may look similar but they are very different. While a loan officer helps the customers through the process of procuring the loan like explaining them various options, assisting with various documents etc., a Credit Analyst studies their case and decides if they can be granted the …
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Credit Analysis is the process of getting together the financial information about a customer (corporations and individuals) and evaluating it to assess their ability to repay a loan, they have applied for. To do this, various ratios are calculated and compared with the industry standards to ensure that while the customer gets the loan, the …
The risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external eventsFor emergence of such a risk four causes have been mentioned and they are people, process, systems and external factors. (a) People risk – Lack of key personnel, lack of adequate training/experience of dealer (measured …
Credit risk is defined as the possibility of losses associated with diminution in the credit quality of borrowers or counterparties. In a bank’s portfolio, losses stem from outright default due to inability or unwillingness of a customer or counterparty to meet commitments in relation to lending, trading, settlement and other financial transactions. Alternatively, losses result …
Foreign exchange risk may be defined as the risk that a bank may suffer losses as a result of adverse exchange rate movements during a period in which it has an open position, either spot or forward, or a combination of the two, in an individual foreign currency. The banks are also exposed to interest …
Interest rate risk is the risk where changes in market interest rates might adversely affect a bank’s financial condition. The immediate impact of changes in interest rates is on the Net Interest Income (NII). A long term impact of changing interest rates is on the bank’s net worth since the economic value of a bank’s …
Liquidity risk is the potential inability to meet the bank’s liabilities as they become due. It arises when the banks are unable to generate cash to cope with a decline in deposits or increase in assets. It originates from the mismatches in the maturity pattern of assets and liabilities. Measuring and managing liquidity needs are …
Market risk may be defined as the possibility of loss to a bank caused by changes in the market variables. The Bank for International Settlements (BIS) defines market risk as “the risk that the value of on or off-balance sheet positions will be adversely affected by movements in equity and interest rate markets, currency exchange …
The banking operations are confined to lending, accepting deposits and miscellaneous services. It is the treasury which operates in financial markets directly, establishing a link between core banking functions and market operations. Thus, the market risk is identified and monitored through treasury. Treasury uses derivatives and other means to bridge the liquidity and rate sensitivity …
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Duration is an important measure of the interest rate sensitivity of assets and liabilities as it takes into account the time of arrival of cash flows and the maturity of assets and liabilities. It is the weighted average time to maturity of all the preset values of cash flows. Duration basically refers to the average …
Analytical models are very important for ALM analysis and scientific decision making. The basic models are as follows: (a) GAP Analysis Model (b) Duration GAP Analysis Model (c) Scenario Analysis Model (d) Value at Risk (VaR) model Favorite
Gap analysis model measures the direction and extent of asset-liability mismatch through either funding or maturity gap. It is computed for assets and liabilities of differing maturities and is calculated for a set time horizon. This model looks at the repricing gap that exists between the interest revenue earned on the bank’s assets and the …
The Asset – Liability Committee (ALCO) consisting of the bank’s senior management including CEO should be responsible for ensuring adherence to the limits set by the Board as well as for deciding the business strategy of the bank (on the assets and liabilities sides) in line with the bank’s budget and decided risk management objectives. …
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As per the RBI Guidelines on Asset Liability Management (ALM) System, the ALM process rests on following three pillars: (i) ALM Information Systems • Management Information Systems • Information availability, accuracy, adequacy and expediency. (ii) ALM Organisation • Structure and responsibilities • Level of top management involvement (iii) ALM Process • Risk parameters • Risk …
ENUMERATE THE THREE REST PILLARS OF ALM PROCESS AS PER RBI GUIDELINES ? Read More »
Asset Liability Management (ALM) defines management of all assets and liabilities (both off and on balance sheet items) of a bank. It requires assessment of various types of risks and altering the asset liability portfolio to manage risks. Asset Liability Management provides a comprehensive and dynamic framework for measuring, monitoring and managing liquidity, interest rate, …
Banks should not capitalise the Broken Period Interest paid to seller as part of cost, but treat it as an item of expenditure under Profit and Loss Account in respect of investments in Government and other approved securities. However, the banks should comply with the requirements of Income Tax Authorities in the manner prescribed by …
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In respect of securities included in any of the three categories where interest/ principal is in arrears, the banks should not reckon income on the securities and should also make appropriate provisions for the depreciation in the value of the investment. The banks should not set-off the depreciation requirement in respect of these non-performing securities …
The following are to be noted with regard to transactions through SGL Account: • It is necessary for both the selling bank and the buying bank to maintain current account with the RBI. • All transactions in Govt. securities for which SGL facility is available should be put through SGL A/c only.• A SGL transfer …
LIST THE POINTS TO BE NOTED WITH REGARD TO TRANSACTIONS THROUGH SGL ACCOUNT ? Read More »
SGL or CSGL are a demat form of holding government securities with the RBI. SGL stands for ‘Subsidiary General Ledger’ account. It is a facility provided by RBI to large banks and financial institutions to hold their investments in Government securities and Treasury bills in the electronic book-entry form. Such institutions can settle their trades …
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A reserve is to be maintained to guard against any possible reversal of interest rate environment on unexpected developments. It is prudent to transfer maximum amount of gains realised on sale of securities to the Investment Fluctuation Reserve (IFR). Banks are free to build IFR up to 10 per cent of the investment portfolio under …
Available for sale (i) The individual scrips in the Available for Sale category will be marked to market at quarterly or at more frequent intervals. (ii) While the net depreciation under each classification should be recognised and fully provided for, the net appreciation under each classification should be ignored. (iii) The book value of the …
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Held for Trading category The individual scrips in the Held for Trading category will be revalued at monthly or at more frequent intervals and provided for as in the case of those in the Available for Sale category. The book value of the individual scrip will change with the revaluation. Favorite
Held to maturity i) Investments classified under Held to Maturity category need not be marked to market and will be carried at acquisition cost, unless it is more than the face value, in which case the premium should be amortised over the period remaining to maturity. (ii) Banks should recognise any diminution, other than temporary, …
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The securities acquired by the banks with the intention to trade by taking advantage of the short-term price/interest rate movements will be classified under Held for Trading (HFT). The securities which do not fall within the above two categories will be classified under Available for Sale. The banks will have the freedom to decide on …
EXPLAIN THE HEAD AVAILABLE FOR SALE AND HELD FOR TRADING ? Read More »
The securities acquired by the banks with the intention to hold them up to maturity will be classified under Held to Maturity (HTM).The investments included under “Held to Maturity” should not exceed 25 per cent of the bank’s total investments. The banks may include, at their discretion, under Held to Maturity category securities less than …
The entire investment portfolio of the banks should be classified under three categories (a) Held to Maturity (b) Available for Sale and (c) Held for Trading. However, in the balance sheet, the investments will continue to be disclosed as per the following existing six classifications: (a) Government securities, (b) Other approved securities, (c) Shares, (d) …
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The main functions of back-office can be summed up as under: • Co-ordination with front-office to ensure optimum usage of all treasury dealing systems; • Internal control and check over treasury dealings, confirmation and settlement activities, and accounting thereof; • Ensuring compliance with stated treasury procedures and stipulations; • Monitoring of SLR/CRR maintenance and submission …
The back-office is responsible for delivery and settlement of all transactions concluded by the front-office officials. It is also responsible for reconciliation of securities portfolio with respective holding entity. Payment of brokerage to brokers, empanelment of brokers, reviewing performance of brokers and monitoring the volume of business passed on to each broker is also under …
The main functions of mid-office can be summarized as under: (i) Management of risks: (a) Market risk which arises on account of: – Interest rate movement – Foreign exchange rate movement – Commodity prices – Equity prices (b) Liquidity risk (c) Country risk (i) Independent market risk monitoring, measurement, analysis and reporting for bank’s ALCO …
The mid-office can be considered to be the conscience keeper of the treasury. It is responsible for the critical functions of independent market risk monitoring, measurement, analysis and reporting for the bank’s AssetLiability Management Committee (ALCO). Ideally, this is a full time function of reporting to, or encompassing the responsibility for, acting as Asset-Liability Management …
Front-office functions can be summarized as under: • Significant interaction with various trading and delivery teams; • Liquidity Management; • ALM implementation; • Striking of Deals (trading) and earning profits from trading; • Maintenance of CRR and SLR; • Follow ‘When Issued Securities’ place order and square up the order well in time against future …
The scope of functions of front-office, as the name itself states, is to buy, sell and trade in money market instruments, securities, forex, equity, derivatives and precious metal. The decisions in regard to any restructuring, reorganizing, pre payment, etc. are taken at front-office. The front-office dealers keep track of and develop their views on different …
The various functions handled by a bank treasury can be divided as under: (a) Front-office: Dealing – Risk taking (b) Mid-office: Risk Management and Management Information (c) Back-office: Confirmations, Settlements, Accounting and Reconciliation. Favorite
The treasury function in banks was limited to Funds management, i.e., maintaining adequate cash balances to meet day-to-day requirements and deploying surplus funds from operations. The treasury in a bank is also responsible for maintenance of reserve requirements (Cash Reserve Ratio and Statutory Liquidity Ratio). Treasury was considered a service centre and liquidity management was …
Arbitrage The purchase or sale of an instrument and simultaneous taking of an equal and opposite position in a related market, in order to take advantage of small price differentials between markets. Asset Class Securities with identical risk/reward composition, attributes and features. At-the-money An option contract with identical risk/ reward composition and features. Asset Allocation …
Some Common Treasury Terms – Any of these may be asked in a Treasury Interview Read More »
Deferred tax asset When profits as per tax laws is more than profits as per books of accounts, A deferred tax asset is required to be created. Deferred Tax Asset journal entry Deferred Tax Asset A/C……. Dr To Profit & Loss A/C………. It is shown under the head of Non Current Assets in the balance …
Golden Rules of Accounting: 1 Debit The Receiver, Credit The Giver 2 Debit What Comes In, Credit What Goes Out 3 Debit All Expenses And Losses, Credit All Incomes And Gains Different types of Accounts: ❖ Personal: Personal Accounts are the ones that are related with individuals, companies, firms, group of associations etc. Eg Veer’s …
● A cash flow statement (CFS) is a financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company. ● The CFS measures how well a company manages its cash position, meaning how well the company generates cash. ● The CFS complements the balance sheet and the income statement. ● …
What is CFS? Components of CFS? What is the treatment of depreciation in CFS? Read More »
For Consolidation of company A and Company B we should check the relationship among the companies such as:- a. If company A holds more than 50% shares in company B, then Holding subsidiary relationship is established. b. If company A holds more than 20% shares in company B, then company A is an Associate of …
Bad Debts Bad Debts amount to that portion of the debts which are either irrecoverable or whose probability of recovery is very rare. Bad Debt Account (Debit), Debtor’s Account (Credit) Provision For Doubtful Debts Provision for bad debts is the estimated percentage of total doubtful debt that needs to be written off during the next …
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Contingencies A contingency reserve is retained earnings that have been set aside to guard against possible future losses. A contingency reserve is needed in situations where a business occasionally suffers significant losses, and needs reserves to offset those losses. Reserves Reserves are part of profits or gain that has been allotted for a specific purpose. …
Provision Provision liability reduces an asset’s value because of a present obligation arising out of a past event The event which can result in a provisional liability may or may not occur. The estimated amount of the provisional liability is not certain Any increase or decrease in provision liability gets recorded in the Profit and …
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Accrued Expenses Accrued Expenses is a term used in accounting where the expense is recorded in the books before it is paid for. Expenses are periodic and are listed on the balance sheet as Accrued Expenses as current liability in balance sheet such as Rent, wages, bank loan interest where payments are made monthly Interest …
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Dividends are payments a company makes to share profits with its stockholders. They’re paid on a regular basis, and they are one of the ways investors earn a return from investing in stock. On Declaration : Retained Earnings…Dr To Dividend payable… Cr On Payment: Dividend Payable…Dr To Bank…Cr The entity may appropriate proposed dividend to …
As per SA 706 EOM is a paragraph included in auditors report that relates to the matters appropriately presented or disclosed in the financial statement and in auditors’ judgement is of importance for users of financial statements. Examples where it is necessary to include EOM paragraph – An uncertainty relating to the future outcome of …
What is EOM para? Does mention of this lead to qualification? Read More »
Types of Audit Reports: 1. Unqualified Audit Report: The auditor issues an unqualified audit report to financial statements when auditors found no material misstatements after their testing. Therefore, this report contains an unqualified opinion from an independent auditor. 2. Qualified Audit Report: The qualified Audit report is the reported issue by auditors to the financial …
Reporting of fraud by an Auditor: ❖ Reporting to CG: As per Section 143 of Companies Act, 2013 if auditor has reason to believe that offence of fraud involves an amount Rs 1 Cr or more by Companies employee, it is to be reported to the CG. ❖ Reporting to Audit Committee: In case of …
To enhance the scope of the audit, the MCA in consultation with the National Financial Reporting Authority (NFRA) released the CARO 2020. It lists out the subject matters on which the applicable companies are mandatorily required to report. CARO 2020 is applicable for all statutory audits commencing on or after 1 April 2021 corresponding to …
‘Audit sampling’ refers to the application of audit procedures to less than 100% of items within a population relevant under the audit, such that all sampling units (i.e. all the items in the population) have a chance of selection (EQUAL chance in case of random sampling). This is to ensure that the items selected represent …
Nature covers what audit procedures will be performed for the company. Changing the nature of an auditor’s substantive testing requires the auditors to take an effective approach to testing. Timing indicates when the audit procedures will be performed. Changing the timing of auditor’s substantive testing ensures reliable evidence such as interim, or year end. Extent …
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Internal Controls are the policies and procedures that a company implements to ensure efficiency of business operations, reliability of financial reporting, compliance with laws & regulations, safeguarding of assets and prevention of frauds. Objectives of Internal Control A. Transactions are executed in accordance with management’s general or specific authorization; B. all transactions are promptly recorded …
A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A deficiency in design exists when (a) a control necessary to meet the control …
Preventive controls include security mechanisms, tools, or practices that can mitigate undesired actions. An example of preventive control is firewalls, anti virus software etc. Detective controls are designed to find and verify whether the preventive or corrective controls are working. Detective controls are designed to detect errors. Examples include audit trails, logs and CCTVs. Note: …
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Internal Audit means “An independent management function, which involves a continuous and critical appraisal of the functioning of an entity with a view to suggest improvements thereto and add value to and strengthen the overall governance mechanism of the entity, including the entity’s strategic risk management and internal control system”. Favorite
Procedures are the systems that are set in place to meet the established standards of the organization. 1. Processes are the actions performed by accounting personnel that are not controls. Controls, on the other hand, are the actions that ensure safety and accuracy. 2. A process is what is being done while Controls ensure accuracy …
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Substantive procedure may be defined as an audit procedure designed to detect material misstatements at the assertion level. Substantive procedures comprise: (i) Tests of details (of classes of transactions, account balances, and disclosures), and (ii) Substantive analytical procedures. Analytical procedure is the process of analyzing plausible relationships among data including both financial and non-financial data. …
An auditor’s opinion is a certification that accompanies financial statements. It is based on an audit of the procedures and records used to produce the statements and delivers an opinion as to whether material misstatements exist in the financial statements. The auditor shall express an unmodified opinion when the auditor concludes that the financial statements …
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Vouching and verification are two different auditing procedures that are used to assess the accuracy and validity of financial transactions and records. Vouching refers to the process of examining and evaluating supporting documentation for a transaction to ensure that it is valid and authorized. This typically involves reviewing invoices, receipts, and other documentation to confirm …
First step in the audit process is planning. Planning an audit involves: (a) Establishing the overall audit strategy (b) Developing an audit plan. “The auditor should plan his work to enable him to conduct an effective audit in an efficient and timely manner. Plans should be based on knowledge of the client’s business”. Plans should …
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Risk of material misstatement: It may be defined as the risk that the financial statements are materially misstated prior to audit. This consists of two components described as follows at the assertion level: Inherent risk—The susceptibility of an assertion to a misstatement that could be material before consideration of any related controls Control risk—The risk …
An internal audit is an independent assessment of an organization’s operations and financial reporting processes, conducted by employees of the organization or by an independent third party. The primary goal of an internal audit is to evaluate the effectiveness of the organization’s internal controls and to identify areas for improvement. An external audit (also known …
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The risk assessment procedures shall include the following: (a) Inquiries of management and of others within the entity who, in the auditor’s judgment may have information that is likely to assist in identifying risks of material misstatement due to fraud or error. (b) Analytical procedures. (c) Observation and inspection Favorite
Section 143(3)(i) of the Act requires the auditors’ report to state whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls. The auditor’s objective in an audit of internal financial controls over financial reporting is, “to express an opinion on the effectiveness of the company’s internal financial …
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Risk assessment procedures: Risk assessment procedures refer to the audit procedures performed to obtain an understanding of the entity and its environment, including the entity’s internal control, to identify and assess the risks of material misstatement, whether due to fraud or error, at the financial statement and assertion levels. Favorite
SA-570 deals with the auditor’s responsibilities in the audit of financial statements relating to going concern and the implications for the auditor’s report. Under the going concern basis of accounting, you are required to prepare the financial statements on the assumption that: i) the entity is a going concern; and ii) the entity will continue …
If the financial statements have been prepared using the going concern basis of accounting but, in the auditor’s judgment, management’s use of the going concern basis of accounting in the preparation of the financial statements is inappropriate, the auditor shall express an adverse opinion. If adequate disclosure about the material uncertainty is made in the …
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The auditor’s responsibilities are to obtain sufficient appropriate audit evidence regarding, and conclude on, the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial statements, and to conclude, based on the audit evidence obtained, whether a material uncertainty exists about the entity’s ability to continue as a …
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As per SA 570, under the going concern basis of accounting, the financial statements are prepared on the assumption that the entity is a going concern and will continue its operations for the foreseeable future. Favorite
