One major role of the external auditor is to ensure a true and fair of the financial statements. In line with this, is the going concern concept whereby it is critical that the continuing “survival” of the company be confirmed particularly if it has very high current ratio, gearing ratio and amount owing to its inter-companies like head office, sisters subsidiaries.

One tool used by the external auditor is to obtain confirmation from its financiers like its holding company or its sister subsidiaries whether they would be “ pulling the plug” by asking the audited companies to pay up its debts owing to them.

Append below is such a Sample of Letter Of Financial Support

Date: XX/XX/XXXX

Name Of Auditor

Address

Dear Sirs

FINANCIAL SUPPORT FOR COMPANY ABC

We confirm that we will continue to support Company ABC. by providing adequate financial assistance to enable the Company to continue its business operations as a going concern for the foreseeable future.

We would also confirm that we will not recall or demand any repayment of the advances made to Company ABC. (“the Company”) as at 31 December 2005, except that insofar as the funds of the Company permits repayment and that such repayment will not adversely affect the ability of the Company to carry on their business operations as a going concern.

Thank you.

——————–

Name: Mr XYZ

Designation: Director

(on behalf of ABC Group of Companies.)