IBIS Technology Corporation Essay Example | Topics and Well Written Essays - 1750 words

IBIS Technology Corporation - Essay ExampleA qualified opinion whitethorn be expressed for one or more of the following reasons The auditor has concluded that there are material but not pervasive misstatements with appraise to the appropriateness and application of accounting policies as well as the adequacy of disclosures in the financial statements The auditor cannot obtain sufficient and appropriate audit inference on which to base an opinion but concludes that the possible effects could be material but not pervasive, including limitations imposed by management and circumstances beyond the companys control. There are uncertainties in relation to whether the company would be able to underwrite to operate as a going absorb During the course of an audit it is a requirement that the auditors take into thoughtfulness the appropriateness of managements use of the going concern assumption in the conceptualisation of the financial statements. The going concern assumption is a under lying assumption in the preparation of financial statements. Going concern assumes that the business will continue in operation for the foreseeable future with no pattern to liquidate. This type of qualified opinion suggests that the possibility exist that the organization may not be operational in the foreseeable future (BPP 2009). It indicates that there are a public figure of factors that could give rise to this including declining sales and profits or increasing losses. This is as well as an indication that an organization may not be able to honor its obligations as they fall due if it cannot generate the level of revenues necessary to do blot out its costs and leave some in reserves. Additionally, if an organization continues to make losses thereby eroding reserves it may... During the course of an audit, it is a requirement that the auditors take into consideration the appropriateness of managements use of the going concern assumption in the preparation of the financial st atements. The going concern assumption is a fundamental assumption in the preparation of financial statements. Going concern assumes that the business will continue in operation for the foreseeable future with no intention to liquidate. This type of qualified opinion suggests that the possibility exists that the organization may not be operational in the foreseeable future. It indicates that there are a number of factors that could give rise to this including declining sales and profits or increasing losses. This is also an indication that an organization may not be able to honor its obligations as they fall due if it cannot generate the level of revenues necessary to do cover its costs and leave some in reserves. Additionally, if an organization continues to make losses thereby eroding reserves it may not be able to carry out any major investments or any projects in the form of look for and development. In a case where an organization is no longer a going concern, the organization s noncurrent (fixed) assets are valued at the footing they are likely to fetch in a forced sale and their current assets such as stock and debtors will also be discounted to the footing they are likely to fetch in a liquidation. This value will be substantially less than the values in the books which assume that the organization is a going concern.