Fondana Medical, Inc. $($Fondana$-$co Medical$)$ is an established pharmaceutical company. The company has been ni operation for thirty years and consists of three core business operations: product sales ni its pharmaceutical outlets, product sales to business customers $-$ hospitals and other pharmacies and manufacturing of pharmaceutical items. The company was started as a local family business and has received additional funding over the years from several private investors.Fondana Medical has a wholy owned subsidiary, which provides health food services to corporate clients around the country. In addition, the company also holds investments ni several private companies with whom ti does business. On September $30,2017,$ Fondana$-$Co Medical guaranteed a $$40$ million debt obligation of one of these investments' Manchester's Partners' for a period of seven years. The Company owns $17\%$ interest in Spurs Partners.The company experienced significant sales growth during its history and continues ot rapidly expand. Fondana$-$Co has for many years generated $80\%$of its revenue through the sale of two specific cold and flu remedies in its pharmaceutical outlets. Despite its many investments, Fondana$-$Co has lately seen a real growth ni the level of competition that ti faces ni its market and demand for its products has significantly declined. To make matters worse, in the past the company has not invested sufficiently in new product development and so has been trying to remedy this by recruiting suitably trained scientific staff, but this has proved more difficult than anticipated. nI addition the company has spent an estimated $$25$m on refurbishing their existing plant. nI order ot fund the expansion Fondana$-$Co has applied for a loan of $$38$m$.$ It has yet to hear from the bank as to whether it will lend them the money.Additional since January $2017,$ Fondana$-$Co sustained a significant decline in its gross margin on product sales due to an increase in the cost of raw materials and failure to monitor compliance with budgetary guidelines. Consequently, some of Fondana$-$co's suppliers have been paid much later than usual and hence some of t h e have withdrawn credit terms meaning the company must pay cash on delivery. As a result of the above the company's overdraft balance has grown substantially. The directors have produced a cash flow forecast and this shows a significantly worsening position over the coming $12$ months.The company launched its e$-$commerce website in $2016$ and receives sales orders from its business customers directly via the website. The business customers are given a $90-$day credit period to pay Fondana$-$co$,$ however, due to difficult trading conditions a number of the receivables are struggling ot pay. The website since being launched ni $2016$ and has consistently encountered difficulties. Customer complains that medical items have been purchased but have not been received but Fondana$-$Co has no record of them and hence has sold the items to anothercustomer.Fondana$-$Co Medical has a senior management team composed of seasoned business managers' nany of whom have been with the company since inception. However, during the current year the CFO resigned to work for a competitor and recruited several key Fondana$-$Co Medical financial professionals ot join him at his new company. After several months of searching, a new CFO with a background ni retail finance was hired. In addition, the accounting department si currently understaffed due to staff turnover. Further, the new CFO is redesigning the accounting policies and procedures and is replacing the general ledger software to improve the effectiveness of the company's financial reporting systems.Page $1$ of $12$ Required:a$)$ Define 'going concern' and state the auditor's responsibilities in respect of going concern. $(5$ marks$)$b$)$ Identify FOUR potential indicators that the company si not a going concern and describe how these indicators could impact upon the ability of the company ot continue trading on agoing concern basis.$(10$ marks$)$c$)$ Explain FIVE audit procedures that the auditor of Fondana$-$CO should perform in assessing whether or not the company is a going concern.