In class end of chapter review $-$ Review and reporting $-5\%$

$($ILOs A$3,$ C$1,$ C$2,$ C$3,$ D$1,$ D$2,$ D$3,$ D$4)$

Which of the above statements are valid?

a$.,1$ and $2$

b$.,2,3$ and $4$

c$.1,2$ and $4$

d$.3$ and $4$

D$.$ Which of the following is NOT an appropriate test to carry out to determine if the going concern basis for the financial statements is reasonable?

a$.$ Ask the bank if they will continue to make an overdraft facility available to the company.

b$.$ Ask the sales director if they have any prospect of new customers to replace the lost one.

c$.$ Perform sensitivity analysis on the cash flow forecasts.

d$.$ Obtain written representation concerning the directors' plans for future action.

You have completed your audit procedures in relation to going concern and have concluded that the going concern basis is appropriate but that material uncertainties exist. You have discussed this with the directors.

E$.$ Match the TWO appropriate responses to each of the outcomes of that discussion with the directors given below.

Directors do not amend the financial statements.

Directors adequately disclose the uncertainties

a$.$ Qualify the auditor's report

b$.$ Include a going concern paragraph in auditor's report

c$.$ Report to those charged with governance

d$.$ Give unmodified opinion

e$.$ Perform additional audit procedures

f$.$ Disclaim audit opinion