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