Fikri & Co. is the auditor for Kinestone Sdn. Bhd., a large interior design company. During the audit for the year ended 31 December 2018, the managing director informed auditor that the company has recently lost a major government contract. The Kinestones projections include a thirty- five percent cash inflows from this contract. The company has been experiencing some cash flow difficulties from previous year and current. Management has extended their bank credit facility to pay day-to-day expenses.

The audit partner is concerned that the company may be facing going concern problem, but the managing director believes that the company intends to cut back future capital expenditure to alleviate the going concern issue.

Required:

Explain the indicators of going concern problems facing by Kinestone Sdn. Bhd.