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Chapter 23
Case Study 2
List the procedures the auditors should adopt for post statement of
financial position events
What particular facts should they elicit re (a) and (b)?
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What might be the significance of these items for the accounts?
Case Study 2
What evidence would the directors have to produce to justify their
opinion that the company is a going concern and how might the
auditors validate the evidence?
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Examination questions
1 Midland Builders
(Note: This is an abbreviated answer)
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c) The specific events
i. The event is an adjusting event as it relates to the value of land held at
the statement of financial position date. The valuation at that date
reflected the development value i.e. it was effectively valued with
The work to be done would be to determine and verify all the facts with
whatever evidence was available. Examples of evidence might be
xthe notice of refusal of planning permission and the valuers’ estimate
of value,
2 Steady Eddy
Part (a)
Explain what is meant by the going concern concept and why the
auditor should consider whether a company is a going concern.
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(b) Explain the circumstances particular to Steady Eddy which may
indicate that it is not a going concern.
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Part (c)
Identify the matters to which you would direct your attention during
the subsequent events review, in the audit of Steady Eddy.
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