How Do You Answer Going Concern Questions in ACCA AA?

Going concern is a recurring ACCA AA topic, and questions typically probe three things: whether there are indicators of a going-concern problem, what audit procedures should be performed, and how it affects the auditor's report. Strong answers address whichever of these the requirement asks for — and always apply to the scenario.

Spot the going concern indicators

• Financial indicators — net liabilities, recurring losses, defaults on loans, inability to pay creditors as they fall due.
• Operating indicators — loss of key staff, markets, franchises or major customers.
• Other indicators — pending legal action, uninsured catastrophes, or regulatory issues.

Pull the specific indicators out of the scenario rather than listing textbook ones.

Describe relevant procedures

Going-concern procedures include reviewing management's cash flow forecasts and assessing their assumptions, reviewing board minutes, examining loan agreements and covenant compliance, obtaining written representations, and reviewing post-year-end events. Make each procedure specific and say what it verifies.

Get the reporting implications right

If a material uncertainty exists and is adequately disclosed, the opinion is usually unmodified with a 'Material Uncertainty Related to Going Concern' section. If the disclosure is inadequate, the opinion is modified. If the going-concern basis is wholly inappropriate, an adverse opinion may be needed.

Practising full going-concern questions and marking them against the official ACCA scheme with The 50% Club shows you exactly where your indicators, procedures or reporting judgement lose marks — the fastest way to make this topic a strength.