TAILIEUCHUNG - AUDIT Considerations In respeCt o f GoinG ConCern In Th e Current eConomiC environment

The audit work required for a live application review is very similar to that undertaken for a system under development with one main exception. When auditing an application under development, there is little opportunity for detailed audit testing. Audit work will focus on evaluating the adequacy of security and control using discussion and a review of technical documentation. The testing phase of the project may allow some scope for control testing, but this is artificial. With a live application review, there is considerable scope for audit testing, as live data will be available together with other documentary evidence such as error logs. Effective use of CAATS (See Section 5. | STAFF AUDIT PRACTICE ALERT IAASB International Auditing and Assurance Standards Board JANUARY 2009 The IAASB is an independent standard-setting board of the International Federation of Accountants. audit considerations in respect of going concern in the CURRENT ECONOMIC ENVIRONMENT This alert is issued by staff of the International Auditing and Assurance Standards Board IAASB to raise auditors awareness about matters relevant to the consideration of the use of the going concern assumption in the preparation of the financial statements in the current environment. In particular management those charged with governance and auditors alike will be faced with the challenge of evaluating the effect of the credit crisis and economic downturn on an entity s ability to continue as a going concern and whether these effects on the entity ought to be described or otherwise reflected in the financial statements. While the Staff Audit Practice Alert Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment October 2008 refers to going concern in the context of the effects of valuation in illiquid markets this alert addresses wider issues that are likely to be relevant to auditors of entities in all industries and of all sizes. While this alert refers principally to ISA 570 other ISAs contain requirements and guidance to assist the auditor in dealing with other issues that may also require particular attention in the current environment such as inventory valuation and allowances for doubtful receivables. This alert does not take account of matters specific to industries or jurisdictions both of which will be relevant to the issues discussed below. Government responses to the crises have been substantial but varied. Thus in some jurisdictions certain aspects of credit availability may have been resolved while others continue to cause difficulties and the particular matters tackled by governments may differ as between jurisdictions. Similarly .

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