Re:Accountancy used to be boring and safe, but today it’s ne...
by rahimnathwani on Thursday May 31, 2018 @04:26AM
(#17194838)
"It is not an opinion about the company's ... future viability."
This is incorrect. Financial statements are prepared on a 'going concern' basis, except where management is planning to liquidate the company's assets. When these accounts are audited, the auditors consider whether the company is likely to be able to continue on its current path (i.e. without becoming insolvent, or raising additional capital beyond that already committed). If that future looks like it will be less than a year, then the auditor will include a 'going concern note' in the audit opinion.
So they definitely look at future viability.
Sources:
- Am an accountant and have engaged external auditors
This is incorrect. Financial statements are prepared on a 'going concern' basis, except where management is planning to liquidate the company's assets. When these accounts are audited, the auditors consider whether the company is likely to be able to continue on its current path (i.e. without becoming insolvent, or raising additional capital beyond that already committed). If that future looks like it will be less than a year, then the auditor will include a 'going concern note' in the audit opinion.
So they definitely look at future viability.
Sources:
- Am an accountant and have engaged external auditors
- https://www.icaew.com/-/media/corporate/archive/files/about-...