Document ID: chunk:federal_register_of_legislation:F2023C00340:reg:10:p12
Version: federal_register_of_legislation:F2023C00340
Segment Type: reg
Provision Reference: reg 10 (pt 12/29)
Character Range: 38290–41269

important to smaller entities' ability to continue as a going concern.  Where a small entity is largely financed by a loan from the owner‑manager, it may be important that these funds are not withdrawn.  For example, the continuance of a small entity in financial difficulty may be dependent on the owner‑manager subordinating a loan to the entity in favour of banks or other creditors, or the owner‑manager supporting a loan for the entity by providing a guarantee with his or her personal assets as collateral.  In such circumstances, the auditor may obtain appropriate documentary evidence of the subordination of the owner‑manager's loan or of the guarantee.  Where an entity is dependent on additional support from the owner‑manager, the auditor may evaluate the owner‑manager's ability to meet the obligation under the support arrangement.  In addition, the auditor may request written confirmation of the terms and conditions attaching to such support and the owner‑manager's intention or understanding.

Period beyond Management's Assessment (Ref: Para. 15)

    A14.         As required by paragraph 11, the auditor remains alert to the possibility that there may be known events, scheduled or otherwise, or conditions that will occur beyond the period of assessment used by management that may bring into question the appropriateness of management's use of the going concern basis of accounting in preparing the financial report.  Since the degree of uncertainty associated with the outcome of an event or condition increases as the event or condition is further into the future, in considering events or conditions further in the future, the indications of going concern issues need to be significant before the auditor needs to consider taking further action.  If such events or conditions are identified, the auditor may need to request management to evaluate the potential significance of the event or condition on its assessment of the entity's ability to continue as a going concern.  In these circumstances, the procedures in paragraph 16 apply.

    A15.         [Deleted by the AUASB.  Refer Aus A15.1]

Aus A15.1 Other than enquiry of management, the auditor does not have a responsibility to perform any other audit procedures to identify events or conditions that may cast significant doubt on the entity's ability to continue as a going concern beyond the period assessed by management, which, as discussed in paragraph Aus 13.2, is approximately twelve months from the date of the auditors' report on the current financial report.

Additional Audit Procedures When Events or Conditions are Identified (Ref: Para. 16)

    A16.         Audit procedures that are relevant to the requirement in paragraph 16 may include the following:

           * Analysing and discussing cash flow, profit and other relevant forecasts with management.

           * Analysing and discussing the entity's latest available interim financial report.

           * Reading the