The auditor should be aware of and consider auditing interpretations applicable to his or her audit. If the auditor does not apply the auditing guidance included in an applicable auditing interpretation, the auditor should be prepared to explain how he or she complied with the provisions of the auditing standard addressed by such auditing guidance.
View AS 2415, Consideration of an Entity's Ability to Continue as a Going Concern
.01 Question—An auditor may be asked to reissue his or her report on financial statements and eliminate the going-concern explanatory paragraph that appeared in the original report. Such requests ordinarily occur after the conditions that gave rise to substantial doubt about the entityʹs ability to continue as a going concern have been resolved. For example, subsequent to the date of the auditorʹs original report, an entity might obtain needed financing. In such circumstances, may the auditor reissue his or her report and eliminate the going-concern explanatory paragraph that appeared in the original report?
.02 Interpretation—An auditor has no obligation to reissue his or her report.1 However, if the auditor decides to reissue the report,2 the auditor should perform the following procedures when determining whether to reissue the report without the going-concern explanatory paragraph that appeared in the original report:
- Audit the event or transaction that prompted the request to reissue the report without the going-concern explanatory paragraph.
- Perform the procedures listed in paragraph .12 of AS 2801, Subsequent Events, at or near the date of reissuance.
- Consider the factors described in paragraphs .06 through .11 of AS 2415, Consideration of an Entityʹs Ability to Continue as a Going Concern, based on the conditions and circumstances at the date of reissuance.
The auditor may perform any other procedures that he or she deems necessary in the circumstances. Based on the information that the auditor becomes aware of as a result of performing the procedures mentioned above, the auditor should reassess the going-concern status of the entity.
[2.] Effect of the Year 2000 Issue on the Auditorʹs Consideration of an Entityʹs Ability to Continue as a Going Concern
[.03-.27] [Paragraphs deleted.]
Footnotes (AI 15 - Consideration of an Entity's Ability to Continue as a Going Concern: Auditing Interpretations of AS 2415):
1 If the auditor decides not to reissue his or her report, the auditor may agree to be engaged to audit the financial statements for a period subsequent to that covered by the original report. This might be the case, for example, if the entity is experiencing profitable operations.
2 Paragraph .05 of AS 3110, Dating of the Independent Auditorʹs Report, states that an auditor may either "dual-date" or "later-date" his or her reissued report.