Going concern refers to the assumption that the entity will continue its buisness for a foreseeable future, which is usually 12 months from the financial statements. This is one of the fundamental assumption of preparing a Financial statement.

The Going concern assumption is the responsibility of the management and not with the Auditor.

The auditors job is to review the going concern assumption of the management and decide whether it is in line with their findings or not.

However, when the management deems the Entity and going concern and also the auditor confirm the same when actually it is not going concern, the audit method should be reviewed as to whether they have taken all the necessary information and findings into consideration. If it's found that, there is negligence on the part of Auditors then they might have to face legal action.

Hence it's the responsibility of the auditor to carefully review the managements assessment and compare them with the current situation and trends.

B)

Significant events or conditions that may cast significant doubt on SS's ability to continue as going concern.

• Reducing Cash flow
• Reducing sales revenue
• Loss of key management
• Large amount of overdrafts
• Lack of resources

As evident from the given situation, the management is experiencing cash flow problems since 2016. And also the management is also not able to pay the creditor on time in line with their credit terms. These are some of many indicators of going concern of the company.

As the suppliers are demanding cash on supply it will not be possible for the company to meet their requirements as the company is facing cash flow problems since 2016. This will reduce the supply and will reduce the sale thus it will reduce the revenue of the company. This will lead to problems in repayment of loans and salary and thus will be a catalyst for high Employee Turnover ratio. Also this might lead to key management personnel leaving the company.

As these have an adverse impact on the Financial statement and going concern of the company.

The Auditor should specify the current situation in their report so that same is informed to the stakeholders of the company. The Financial statement should be prepared in such a way that the going concern is doubtful for the current year.