Strategy
Going Concern and Evidence Strategy for a UK Retailer
Overview
What this challenge is about.
Individually, prepare an audit evidence strategy memorandum addressing Cotswold Home's going concern assessment for the year ending 31 March. Critically evaluate management's 18-month cash flow forecast (provided), perform sensitivity analysis on at least three key assumptions (like-for-like sales, gross margin, working capital), and identify what additional audit evidence you would seek (third-party confirmations, post-balance-sheet review, covenant computation). Conclude on whether a 'material uncertainty related to going concern' paragraph, qualified opinion, or unmodified opinion with KAM is most appropriate, and draft that section of the auditor's report. Constraints: comply with ISA 570 (Revised) and ISA 700/701; address how you would handle management's request to remove uncertainty language. Success means a defensible recommendation supported by sufficient appropriate evidence and a correctly drafted report extract.
The Brief
What you'll do, and what you'll demonstrate.
Is Cotswold Home Ltd.'s use of the going concern basis appropriate, and what evidence and reporting outcome should the auditor pursue?
Earning criteria — what you'll demonstrate
- Evaluate the sufficiency and appropriateness of audit evidence for complex estimates
- Apply ISA 570 (Revised) to going concern assessments and reporting outcomes
- Integrate the audit risk model with evidence-gathering decisions for high-risk areas
- Apply professional skepticism and the IESBA ethics framework when challenged by management
- Draft technically accurate auditor's report sections including KAMs and material uncertainty paragraphs
Program Fit
Where this fits in your program.
Sharpens the same skills your degree expects you to demonstrate.
Skills
Skills you'll demonstrate.
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Careers
Roles this prepares you for.
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