Thursday, May 21, 2020
COVID-19 is having an unprecedented impact on the economic outlook for the Australian and global economy. For the first time, many entities will be required to consider their solvency and ability to continue operating as a going concern in more detail.
The AASB and AUASB have released a new publication which provides an overview of directors’ and management’s:
• duties in relation to assessments of solvency and going concern, how these concepts interact and how these may be impacted by COVID-19; and
• responsibilities to assess whether the going concern basis of preparation is appropriate and how this impacts the preparation of and the disclosures in their financial statements.
This publication has also been prepared to assist auditors by providing an overview of an auditor’s obligations in relation to going concern and directors’ declarations of solvency, as part of their overall responsibilities when conducting an audit of the financial report.