Covid-19 and the South African lockdown has affected all industries across South Africa, casting doubt as to whether many businesses will continue operating successfully, if at all. Businesses that were unable to trade for prolonged periods faced extreme financial difficulties. As auditors, the profession as a whole will be under scrutiny to ensure that our audit opinions following the impact of this global pandemic are appropriate, given the increased risk of businesses potentially failing to meet the definition of a going concern.
Under IFRS® standards, management is responsible for assessing the company’s ability to continue functioning as a going concern. Management therefore is required to assess whether a company will continue in operation for the foreseeable future (of at least 12 months) and be able to meet its debts as they fall due. If this going concern assumption is no longer appropriate, this gives rise to an adjusting event under IFRS.
In order to assist our audit services clients, here is a list of some of the considerations that you will need to apply as a member of the management team responsible for the going concern process:
Let us assist you with: