(a) Financial and Non-Financial Going Concern Symptoms

• Financial Symptoms:
  1. Recurring operating losses.
  2. Low liquidity ratio.
  3. Use of short-term funds for long-term projects.
  4. Working capital deficiencies.
  5. High gearing ratio.
• Non-Financial Symptoms:
  1. Loss of key management staff.
  2. Loss of franchise or patent.
  3. Loss of primary suppliers or customers.
  4. Work stoppages or labor difficulties.
  5. Excessive reliance on a single project.

(b) Audit Procedures to Determine Going Concern Problems

1. Review cash flow forecasts for the upcoming period.
2. Analyze post-balance sheet trading and its effect on cash flow.
3. Evaluate management’s rescue plans for consistency and feasibility.
4. Examine management accounts and subsequent financial records.
5. Check correspondence with creditors for signs of payment pressure.
6. Compare the client’s position to similar companies in the industry.

(c) Additional Factors for Assessing Continuation Capability

1. Potential asset disposals that won’t adversely impact operations.
2. Rescheduling or renegotiation of current financing arrangements.
3. Access to financial assistance without negatively affecting gearing.
4. Leasing of assets instead of outright purchase to reduce costs.