Going Concern: Stigende krav til revisor og bliver disse overholdt i praksis?

Thomas Larsen

Student thesis: Master thesis


Going concern is a significant element in the execution of an audit and the primary condition for, that the annual report as itself gives a true and fair view of the current situation of the company. Going concern can be described as the company’s ability to continue the operations in 12 months from the year end, including the ability to liquidate its assets and obligations, as a part of the daily operations. In practise, the auditor is subject to ISA 570, in where the actions of the auditor, at the evaluation of going concern as an accounting principle, are described. The overall goal to an auditor is to secure a high standard of security for that the company can survive 12 months from the year end. The auditor has to identify this goal through the whole audit process, this being from the planning to the reporting phase. If the auditor finds conditions which indicate problems with the going concern, there will be a several number of additional actions to be performed by the auditor. These actions contain a high level of engagement from the management, including a control of the management’s assessments and the conditions which are based on their evaluation. If the auditor still assess that the company has problems continuing the activities in the next 12 months, then it should be included in the annual rapport as a modified statement. Based on the auditor’s statement in the annual report, a number of expectations from the accounting user to the credibility of the financial statements are created. These expectations do not always correspond to the security of the auditor’s statement in practice – the so called “Expectation Gap”. This gap is defined as an inconsistency of expectations between the two parties, in this case accounting user and auditor, which at any time should be reduced as much as possible. To obtain the smallest expectation gap possible between accounting user and auditor it requires, that accounting user has a basic understanding of reading an annual report and auditor’s role related to an audit. This basic understanding is obtained by creating a shared understanding of what auditor has to perform (presentation gap) as well as what the user of an annual report as reasonably can expect from the auditor (reasonably gap).

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2014
Number of pages84