Here is the reply for Going Concern i got from Rogers.
Hello Insiyah
A disclaimer of opinion may be appropriate but an “except for” modified opinion is never appropriate when substantial doubt about an entity's ability to continue as a going concern has been adequately disclosed.
First, the “textbook” answer:
At a bare minimum, SAS No. 59 requires the auditor to evaluate whether there is substantial doubt about the company’s ability to continue as a going concern for a reasonable period of time, not to exceed one year beyond the date of the financial statements being audited.
If the auditor has substantial doubt about the entity’s ability to continue in existence for that length of time, the auditor should add an explanatory “emphasis” paragraph highlighting the client’s disclosure of the going concern uncertainty to the standard unmodified report.
If there’s potential doubt about a company’s going-concern status, the audit firm is expected to talk to management about how they plan to keep the company afloat — such as by selling off noncritical assets — and the feasibility of such plans.
If, after assessing management’s strategies, the auditors still have “substantial doubt” about the company’s ability to stay a going concern, they will explain that in their report. Otherwise, without a going-concern modification, auditors “presume you will stay in business.”
Finally, the “common sense” explanation:
An “except for” modified opinion is like your doctor telling you “except for the terminal cancer, you are in excellent health.”
I hope this is helpful.
FAR 05/27/14; 786/110 - Done !
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