The external auditor’s responsibilities in relation to the going concern status of a company are guided by ISA 570. The following responsibilities must be carried out:

1. Evaluate Management’s Assessment:
   • The auditor must evaluate management’s assessment of the company’s ability to continue as a going concern, considering whether management’s process is thorough and adequately supported with appropriate evidence.
2. Consider Events or Conditions:
   • The auditor must remain alert throughout the audit for any events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. This includes reviewing financial indicators, operational issues, and external factors such as market conditions.
3. Obtain Sufficient Appropriate Evidence:
   • If events or conditions suggest uncertainty about the company’s ability to continue as a going concern, the auditor must gather sufficient appropriate evidence to determine if a material uncertainty exists. This may include analyzing cash flow forecasts, reviewing loan agreements, or checking the company’s ability to raise additional funds.
4. Evaluate Assumptions and Plans:
   • The auditor must assess the reasonableness of the assumptions made by management and evaluate the adequacy of the plans for future actions to mitigate the going concern risk, such as planned cost-cutting measures or fundraising activities.
5. Reporting:
   • The auditor must consider whether adequate disclosure of going concern issues has been made in the financial statements. If a material uncertainty exists, the auditor will report it appropriately in the audit opinion, either by adding an emphasis of matter paragraph or modifying the audit opinion if necessary.