Which of the following audit procedures is most likely to assist an auditor in identifying conditions and events that may indicate substantial doubt about an entity's ability to continue as a going concern?
A)Review compliance with the terms of debt agreements.
B)Confirm accounts receivable from principal customers.
C)Reconcile interest expense with outstanding debt.
D)Confirm bank balances.

Question

Quizplus · Accepted Answer

Reviewing compliance with the terms of debt agreements can provide insight into whether the entity may have difficulty meeting its financial obligations and may indicate substantial doubt about its ability to continue as a going concern. Confirming accounts receivable, reconciling interest expense with outstanding debt and confirming bank balances are important audit procedures, but may not be as effective in identifying going concern issues.

Which of the Following Audit Procedures Is Most Likely to Assist