You are the engagement officer of an auditing firm. Pacific Limited is a retail audit client. A global pandemic has seen a dramatic decline in their trading activity for the current financial reporting period. They have been fortunate to be able to mitigate the impact to some extent by adopting some trading activity to their currently developing online platform and taking advantage of government support programs. The resulting cash flow difficulties have been successful. However, the Pacific is unable to renegotiate an already fully drawn borrowing facility with their bank. Those charged with governance have not included this matter in the financial report. The internal audit department of the client leads by Frank Parson who is planning to retire in the next two years.

 

Required:

1. Advise the auditor about the use of the internal auditor's work
2. Are there any going concern issues?
3. How will the auditor recommend the issues to be presented in the audit report?