Gain Public Trust by Expanding Going Concern Requirements for the Auditors

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The PCAOB should expand the requirements for auditors regarding going concern as-sumption and define them, so the auditors can improve their performance and gain back the trust of public. The focus of the paper is to show that current requirements prove to be insufficient for auditors for making correct assumptions. Unable to detect bankruptcies on time, lack of training to predict future and overconfidence of auditors hinders them in making accurate assumption about going concern reporting. The paper provides evidence for each hindrance followed by sug-gestions for improvement. It concludes with an alternative approach addressing the issues if management makes going concern assumptions as well as mentions conditions worsening due to regulations being eliminated. AUDITOR’S CURRENT RESPONSIBILITIES The auditing standards explain that during the course of an audit, auditors perform a lot of different tests to uncover misstatements. The auditors look for any information in the reporting process that could possibly affect the company’s operations within the next year (AU 341.01). With the help of tests, the auditors can assess whether the company will continue to operate. Auditors are not responsible for performing tests specifically for the purpose of finding evidence regarding going concern; however, they are responsible for disclosing any evidence or information they come across during the audit. Auditors communicate all evaluations to the management and the Audit Committee at the end of the audit. INSUFFICIENT CURRENT REQUIREMENTS Considering the above mentioned auditor’s responsibilities, they seem vague. Current requirements are not sufficient to gain back the trust of public. The bankruptcies prove that the auditor... ... middle of paper ... ...rn Judgments and on the Audit Opinion Decision. Journal of Business & Economic Research. Vol 9, Issue 9. Sept 2011. Crystal, Mel. 2005. Food for Thought. The CPA Journal (NYSSCPA). January 2005 Online Issue. Edgar Search. SEC filing. Retrieved from: www.sec.gov Mayew, William J., Mani Sethuraman and Mohan Venkatachalam. 2012. MD&A Disclosure and the Firm’s Ability to Continue as a Going Concern. Business Complete Source Database. Nov 2012. Radin, Arther J. and Miriam E. Katowitz. 2013. Should Auditors Opine on Going Concern? The CPA Journal. Oct 2013 Issue. Pages 6-9. Sikka, Prem. 2009. Financial Crisis and the Silence of Auditors. Accounting, Organization and Society. Elsevier. Issue 39. Venuti, Elizabeth K. 2004. The Going-Concern Assumption Revisitied: Assessing a Company’s Future Viability. The CPA Journal. Vol 74, Issue 5. Pages 40-43. May 2004.

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