In the event that an auditor has to review and diagnose the going concern difficulties of his/her clients, he/she should at the very least:

• compare the client’s cash flow forecasts with the overdraft or other loan facilities available for up to twelve months from the accounting date
• obtain written confirmation from the board of the holding company (if any) that it intends its subsidiary to continue in business and will not withdraw existing financial supports
• enquire into and obtain written evidence of the steps(if any) the client is taking in order to correct its decline in fortunes.

If the auditor cannot satisfy himself that the client will remain in business in the foreseeable future, then he must consider the validity of the going concern basis and the need to qualify his audit report in appropriate terms

1. to confirm and ensure the independence and objectivity of external auditors and review with management any areas of disagreement between management and the external auditors;
2. to review and recommend approval of or otherwise the company’s major accounting policies, principles and practices;
3. to review with the external auditors the interim and final results of the company;
4. to discuss with the external auditors the scope of the external audit, the extent of their reliance on internal audit, and any matters arising from the external audit;
5. review with the Chairman and Chief Executive the adequacy of internal control systems including the internal audit function; its professional standards; scope; resourcing; reporting arrangement; work plan and interface with the external auditors. The Chief Internal Auditor or Head of Internal Audit must have direct access to the Audit Committee;
6. to approve the external audit fee and review any non-recurring, non-audit services to be performed by the external auditors and to appraise and report on any possible conflicts of interest;
7. to review the responses of management to major recommendations made by external or Internal Audit;
8. review policies and practices involving legal compliance, ethics and other such matters and ensure that these are adequate;
9. to meet with the external auditors at their request at any time they deem necessary.