Auditing & Assurance › Going Concern
How should the auditor handle a 'close call' going concern situation?
AdvancedAnswer
In a close-call scenario—where doubt exists but management concludes no material uncertainty—the auditor rigorously challenges the assessment, ensures disclosures adequately convey the risks even if not labeled a material uncertainty, considers whether the close call is a Key Audit Matter, and documents the judgment carefully. Transparency to users is key even when the going concern basis is retained.
Real-world example Judging it a close call, the auditor pushes for fuller risk disclosure and reports the matter as a KAM despite no formal material uncertainty.