Problems of Professional Judgment Application in Evaluating the Company’s Going Concern

摘要

Background/Objectives: The main purpose of this article is to develop ways of improving the audit technology of audited entity’s ability to continue as a going concern to overcome the drawbacks of available procedures. Methods: Such scientific methods as observation, abstraction, analogy, deduction, abduction, induction, analysis, synthesis, formalization and modeling, as well as specific methods: retrospective analysis, comparative analysis and data grouping were used. A distinctive feature of the author’s technique is risk-based modeling of in-house audit standards with respect to evaluating the entity’s ability to continue as a going concern, based on the identification of labile areas of audit opinion and neutralizing them through the establishment of professional judgment borders. Findings/Improvements: The article has identified the main areas of uncertainty of preparation of accounting (financial) statements in a liquidation (bankruptcy) situation, as well as the problem of identifying these areas by the auditors in the course of the risk assessment and substantive procedures determined by the existing International Standards on Auditing (ISA 570).In the context of quality problem solution, the main risks in inadequate identification and assessment of importance of separate features of the audited entity’s ability to continue as a going concern have been determined. The main directions of in-house testing standardization of going concern assumption of an audited entity have been proposed and substantiated. Application: Implementation of these proposals will allow the independent auditors (audit organizations) and internal auditors to ensure the principles of objectivity, adequate diligence and audit rationality.