Course Introduction
The Going Concern Assessment and Financial Audit Training Course provides a practical and comprehensive framework for understanding how auditors evaluate an entity’s ability to continue operating and meet its obligations as they fall due. The course examines financial, operational, commercial, and external indicators that may create uncertainty about an entity’s ability to continue as a going concern and explains how auditors respond to those risks.
Going concern assessment requires auditors to consider more than current profitability. An entity may report profits while experiencing severe liquidity pressure, debt refinancing difficulties, covenant breaches, declining cash flows, customer concentration, or other financial challenges. Participants will learn how to analyze financial statements, cash flow forecasts, budgets, financing arrangements, liquidity positions, and other relevant information to identify circumstances that may indicate going concern uncertainty.
The program examines management’s responsibilities for assessing going concern and the auditor’s responsibility to evaluate management’s assessment using sufficient and appropriate audit evidence. Participants will learn how to challenge assumptions, assess the reliability of forecasts, test underlying data, evaluate financing plans, and consider whether management’s plans are realistic and adequately supported by evidence.
A major focus is placed on cash flow forecasting and financial resilience. Participants will learn how to evaluate forecast assumptions, sensitivity analyses, financing requirements, working capital movements, debt maturities, capital commitments, expected revenues, cost structures, and liquidity resources. Practical techniques will be used to assess whether an entity has sufficient financial resources to meet its obligations under reasonably foreseeable conditions.
The course also addresses audit procedures for circumstances involving significant uncertainty. Participants will explore debt agreements, covenant compliance, refinancing arrangements, post-balance-sheet events, legal claims, customer and supplier relationships, restructuring plans, asset disposals, government support, and other factors that may affect the going concern assessment. Attention is also given to identifying management bias and overly optimistic assumptions.
Through practical case studies, financial analysis exercises, cash flow forecast reviews, going concern assessment scenarios, audit evidence evaluations, and documentation activities, participants will develop practical skills for identifying, evaluating, and documenting going concern risks. The course is designed to help auditors apply professional skepticism, strengthen financial analysis, evaluate disclosures, and reach well-supported audit conclusions.
Duration
5 days
Who Should Attend
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External auditors responsible for evaluating going concern risks during financial statement audits.
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Audit managers and supervisors reviewing going concern assessments and audit conclusions.
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Audit seniors and team leaders performing financial analysis and going concern procedures.
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Internal auditors assessing financial sustainability, liquidity, and organizational risks.
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Accountants responsible for preparing going concern assessments and supporting financial forecasts.
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Finance managers involved in cash flow forecasting, budgeting, financing, and financial reporting.
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Treasury professionals responsible for liquidity management and debt financing arrangements.
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Risk management professionals evaluating financial resilience and business continuity risks.
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Financial controllers supporting year-end financial reporting and external audit processes.
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Public sector auditors assessing financial sustainability and funding risks.
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Forensic auditors investigating financial distress, unusual transactions, or potential management bias.
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Newly qualified auditors developing practical financial analysis and going concern assessment skills.
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Experienced auditors seeking to strengthen going concern procedures and professional judgment.
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Audit quality professionals reviewing documentation and conclusions relating to going concern matters.
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Professionals responsible for financial forecasts, audit evidence, disclosures, and financial risk assessment.
Course Objectives
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Develop a comprehensive understanding of going concern concepts and their importance in financial reporting, audit planning, risk assessment, and audit conclusions.
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Identify financial, operational, commercial, legal, and external indicators that may create significant going concern risks or financial uncertainty.
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Evaluate management’s going concern assessment and determine whether its assumptions, forecasts, plans, and supporting evidence are reasonable and adequately supported.
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Analyze cash flow forecasts, liquidity positions, debt maturities, financing arrangements, budgets, working capital movements, and other financial information relevant to going concern.
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Apply practical audit procedures to test the reliability of management forecasts, assumptions, financing plans, and mitigating actions intended to address financial pressures.
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Assess the impact of covenant breaches, refinancing requirements, overdue obligations, declining revenues, significant losses, and adverse cash flow trends on going concern conclusions.
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Apply professional skepticism when evaluating optimistic forecasts, unsupported assumptions, management plans, contradictory evidence, and indicators of financial distress.
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Evaluate subsequent events and post-reporting-date developments that may provide additional evidence about conditions affecting the going concern assessment.
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Assess the adequacy and transparency of financial statement disclosures relating to going concern risks, material uncertainties, management judgments, and mitigating actions.
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Prepare clear and defensible audit documentation that connects identified going concern risks, evidence obtained, procedures performed, professional judgments, and final audit conclusions.
Comprehensive Course Outline
Module 1: Going Concern and Financial Audit Fundamentals
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Understanding the going concern concept and its significance in financial reporting, audit planning, risk assessment, and audit conclusions.
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Examining the relationship between going concern, financial performance, liquidity, solvency, cash flow generation, and the entity’s operating environment.
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Understanding management’s responsibilities for assessing going concern and the auditor’s responsibilities for evaluating management’s assessment.
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Identifying common misconceptions about going concern and distinguishing temporary financial difficulties from circumstances indicating significant uncertainty.
Module 2: Identifying Going Concern Risk Indicators
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Identifying financial indicators such as recurring losses, negative operating cash flows, liquidity shortages, net liability positions, and deteriorating financial ratios.
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Evaluating operational indicators including loss of key customers, supply disruptions, dependence on critical personnel, production difficulties, and declining market demand.
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Assessing external and legal indicators such as regulatory changes, litigation, adverse economic conditions, financing constraints, and significant contractual obligations.
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Linking identified indicators to financial statement risks and determining whether they require enhanced audit attention or additional evidence.
Module 3: Financial Statement and Ratio Analysis
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Analyzing profitability, liquidity, solvency, leverage, working capital, cash conversion, and other financial indicators relevant to going concern assessment.
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Evaluating trends in revenue, margins, operating costs, receivables, inventory, payables, debt, cash balances, and operating cash flows.
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Comparing financial performance with prior periods, budgets, forecasts, industry information, financing requirements, and management expectations.
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Using financial analysis to identify deteriorating trends, unusual relationships, financial pressures, and areas requiring further audit investigation.
Module 4: Management Going Concern Assessments
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Evaluating management’s process for identifying, assessing, and documenting going concern risks and the period covered by its assessment.
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Assessing the reasonableness of management assumptions concerning revenues, expenses, margins, cash flows, financing, working capital, and future operating performance.
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Testing the accuracy of historical forecasts by comparing previous projections with actual results and investigating significant forecasting weaknesses.
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Evaluating management’s plans for addressing financial difficulties and determining whether those plans are realistic, feasible, and supported by credible evidence.
Module 5: Cash Flow Forecasting and Liquidity Assessment
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Reviewing cash flow forecasts and assessing whether projected cash inflows, outflows, financing requirements, and available resources are reasonable.
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Testing key forecast assumptions using historical performance, contracts, customer information, budgets, operational data, and other supporting evidence.
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Performing sensitivity analysis and stress testing to assess the impact of adverse changes in revenues, margins, collections, costs, interest rates, and financing availability.
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Evaluating liquidity resources, committed facilities, cash reserves, working capital, payment obligations, and the timing of expected cash requirements.
Module 6: Debt, Financing, and Covenant Assessment
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Evaluating debt maturity profiles, repayment obligations, refinancing requirements, interest commitments, and available financing facilities.
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Reviewing loan agreements and financial covenants to identify potential breaches, waiver requirements, acceleration clauses, and other going concern implications.
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Assessing management’s refinancing plans and obtaining evidence concerning lender discussions, financing commitments, facility renewals, and alternative funding sources.
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Evaluating the financial and reporting implications of covenant breaches, overdue obligations, defaults, restructuring arrangements, and significant financing uncertainties.
Module 7: Audit Procedures and Evidence for Going Concern
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Designing substantive audit procedures to address identified going concern risks and obtain sufficient appropriate evidence for the auditor’s conclusion.
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Evaluating subsequent events, board minutes, legal correspondence, financing developments, customer activity, supplier relationships, and other post-period information.
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Assessing management representations alongside independent evidence and investigating contradictory or inconsistent information affecting the going concern assessment.
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Determining when specialist involvement, additional analytical procedures, expanded testing, or alternative evidence may be necessary to support the audit conclusion.
Module 8: Mitigating Actions, Forecast Uncertainty, and Professional Skepticism
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Evaluating proposed cost reductions, asset disposals, capital injections, restructuring programs, refinancing plans, and other management responses to financial pressures.
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Assessing whether mitigating actions are within management’s control, realistically achievable, sufficiently detailed, and supported by appropriate evidence.
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Identifying optimistic assumptions, management bias, unrealistic growth expectations, unsupported cost reductions, and other weaknesses in financial forecasts.
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Applying professional skepticism when evaluating management plans and determining whether evidence supports reliance on proposed mitigating actions.
Module 9: Disclosures, Material Uncertainty, and Audit Conclusions
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Evaluating the completeness, accuracy, clarity, and transparency of financial statement disclosures relating to going concern risks and significant uncertainties.
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Assessing whether the financial statements appropriately communicate relevant conditions, assumptions, uncertainties, mitigating actions, and potential financial consequences.
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Determining how going concern findings affect audit documentation, communication with governance, audit conclusions, and reporting considerations.
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Documenting the relationship between identified risks, management assessment, audit procedures, evidence obtained, disclosure evaluation, and final professional judgment.
Module 10: Audit Completion and Practical Going Concern Case Studies
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Performing final going concern evaluations using updated financial information, subsequent events, revised forecasts, audit findings, and management representations.
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Integrating financial analysis, cash flow testing, debt assessment, covenant review, forecast evaluation, and disclosure procedures into a complete audit response.
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Completing practical case studies involving financial distress, refinancing challenges, forecast uncertainty, mitigating actions, subsequent events, and disclosure considerations.
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Preparing comprehensive working papers that clearly demonstrate the auditor’s risk assessment, procedures, evidence, judgments, and final going concern conclusion.
Training Approach
This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.
Tailor-Made Course
This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: training@upskilldevelopment.com Tel: +254 721 331 808
Training Venue
The training will be held at our Upskill Training Centre. We also offer training for a group (at a discount of 10% to 50%) at requested location all over the world. The Onsite course fee covers the course tuition, training materials, two break refreshments, buffet lunch, airport transfers, Upskill gift package, and guided tour.
Visa application, travel expenses, dinners, accommodation, insurance, and other personal expenses are catered by the participant
Certification
Participants will be issued with Upskill certificate upon completion of this course.
Airport Pickup and Accommodation
Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: training@upskilldevelopment.com, +254 721 331 808
Terms of Payment:
Unless otherwise agreed between the two parties’ payment of the course fee should be done 3 working days before commencement of the training so as to enable us to prepare better.
