GOING CONCERN. THE AUDITOR’S LIABILITY TOWARDS THE LAWFULNESS APPEARANCE

Miruna Lucia Nachescu, Anca Cristina Mataragiu

Abstract


The increasing appetite for risk developed by companies as well as their investors lead to economic practices which from the auditor’s point of view should have raised questions in regard to the company’s ability to maintain as a going concern. There was also the lack of appropriate legislation which in the end allowed for a cover up of major exposures to risk and in the end for a trust put in fragile financial systems. Evaluating a company as a going concern the auditor shall have to perform not only rigorous valuations of the company’s exposure to risks but also make sure he adapts its audit procedures to the assessed risks. Appearances are not to be trusted when it comes to an audit of financial statements, as in the end besides the obvious professional role it has, the auditor should also play the role of a fortune-teller or else be prepared to face the law for his negligence.

Keywords


risk; audit opinion; going concern; lawfulness appearance

Full Text:

PDF

References


Graham W. Cosserat, Modern Auditing, Second edition, Wiley Publishing house, 2008, pg. 94

A. Eilifsen, W.F. Messier Jr., S. M Glover, D. F. Prawitt, ‘‘Auditing and assurance services”, International edition, Mc.Graw Hill Publishing House, 2006

Sarah Johnson, ‘‘Regulators eye ‘‘Going concern” Concerns”, CFO.com, April 2009

P. Sikka, Financial crisis and the silence of the auditors, Accounting, Organizations and Society, 2009

Alex Spence – ‘‘Auditors plead for help amid fear of lawsuits”, The Times Magazine, April 24, 2009

Alex Spence – ‘‘ Auditors face scrutiny over independence”, The Times Magazine, October 6, 2009

Andrew Teague, ‘‘The audit of going concern”, In practice Ireland Magazine, June 2008

ICAEW, Going concern, www.accountancymagazine.com, January 2008

“Can auditors be sure a firm will survive the next 12 months?”, Economist Staff - The Economist, November 21, 2008

“Satyam founder faces life imprisonment” ‘‘, Times Online, April 8, 2009

“Tech Mahindra wins bid for 'India's Enron'‘‘, Times Online, April 13, 2009

“PwC auditors 'ignored' Satyam fraud for fees”, Times Online, April 24, 2009

OUG no. 90/2008, regarding the statutory audit of the consolidated annual financial statements published in the Official Journal of June 30th 2008 (later modified by Law 278/2008 and by OUG 78/2009

The 2006/43/CE Directive from May 17th 2006 of the European Parliament and of the Annual and consolidated statutory audit Counsel, to modify the Counsel directives 78/660/CEE and 83/349/CEE

ISA 240 “The auditor's responsibility to consider fraud in an audit of financial instruments”

ISA 315 “Understanding the entity and its environment and assessing the risks”

ISA 570 “Going Concern”




DOI: http://dx.doi.org/10.17770/lner2010vol1.2.1792

Refbacks

  • There are currently no refbacks.


Copyright (c) 2016 Miruna Lucia Nachescu, Anca Cristina Mataragiu