The going concern assumption is one of the fundamental principles for preparing financial statements. In accordance with this principle, the audited entity will continue to carry out its financial and business activities for 12 months after the reporting period and has no intention or need to liquidate, cease operations or seek protection from creditors. The assets and liabilities of the audited entity should be taken into account on the basis that it will be able to fulfill its obligations and realize its assets in the course of future activities. Management of the audited entity must evaluate its organization's ability to continue as a going concern. If the audited entity has a long history of profitable transactions and ready access to financial resources, management may evaluate the going concern assumption without conducting a detailed analysis.

The auditor may question the applicability of the continuity assumption in the following cases:

1. financial characteristics:

— negative net assets;

- borrowed funds, the repayment period of which is approaching in the absence of a real prospect of repayment or extension of the loan term, or the unreasonable use of short-term loans to finance long-term assets;

— changing the scheme of payment for goods, works, services to suppliers on the terms of a commercial loan or deferred payments;

— significant deviation of the main ratios characterizing the financial position of the audited entity from normal values;

— failure to repay accounts payable within due time limits;

— inability to provide financing for the development of its activities and the implementation of other important investments;

— significant losses from core activities;

— arrears in payment or termination of payment of dividends;

— economic irrational debt obligations;

— signs of bankruptcy established by law.

2. production characteristics:

— dismissal of key management personnel without proper replacement;

— loss of sales markets, licenses of main suppliers;

— a problem with labor resources or a shortage of significant means of production;

— significant dependence on the successful completion of a specific project;

— a significant volume of sales of raw materials and materials, comparable to or exceeding the volume of revenue from the sale of products, works, services.

3. other signs:

— failure to comply with legal requirements regarding the formation of authorized capital;

— legal claims that are in the process of consideration and which may result in a court decision that is impossible for the audited entity.

When planning the audit, the auditor should consider whether any events or conditions exist that may cast doubt on the going concern of the entity. During the audit, the auditor should closely monitor the existence of documents that raise doubts about the going concern.

If factors are identified that cast doubt on the going concern, the auditor should:

a) check the audited entity's plans for future activities

b)gather the necessary audit evidence to confirm or refute the material uncertainty.

To confirm the presence of factors that cast doubt on going concern, the following audit procedures are applied:

a) analysis and discussion with the management of the audited entity of forecasts regarding the movement of financial flows and income;

b) analysis and discussion of interim financial statements;

c) analysis of the conditions for obtaining and repaying loans, identifying violations of the conditions for repaying loans;

d) familiarization with the minutes of the meeting of shareholders, meetings of the board of directors in order to identify any mention of financial difficulties in them;

e) survey of lawyers and other specialists of the audited entity in order to identify information regarding the existence of lawsuits and the correctness of management’s assessment of the impact of these lawsuits on the financial condition;

f) checking the legality and ability to enforce financing agreements on the part of affiliated and third parties, as well as assessing the ability of these parties to provide additional funds;

g) studying the audited entity's plans regarding outstanding orders from its clients.

If in the audit report the auditor does not indicate his doubts about the applicability of the continuity assumption, then this should not be interpreted by the audited entity and interested users as a guarantee from the auditor that the audited entity will continue its activities and fulfill its obligations.

If there are facts indicating that the continuity principle may not be applicable, the auditor must reflect this circumstance in the auditor’s report:

a) if the financial statements reliably disclose information, the auditor expresses a positive opinion, but includes an additional paragraph in the auditor’s report, which notes the presence of a material uncertainty and indicates the reasons for this;

b) if the financial statements do not reliably disclose information, the auditor expresses a qualified or negative opinion, and the report also indicates a reference to the presence of a material uncertainty.

RULE (STANDARD) N 11.
APPLICABILITY OF THE CONTINUITY ASSUMPTION
ACTIVITIES OF THE AUDITED ENTITY

(introduced by Decree of the Government of the Russian Federation dated July 4, 2003 N 405)

Introduction

1. Real federal audit rule (standard) , developed taking into account international auditing standards, establishes uniform requirements for the actions of the auditor to verify the legality of the application by the audited entity going concern assumptions when preparing financial (accounting) statements, including when considering the assessment provided by the management of the audited entity of the ability of the specified entity to continue to continuously carry out its business activity.

2. The assumption of going concern is the basic principle of preparing financial (accounting) statements. In accordance with the going concern principle, it is generally assumed that the audited entity will continue to carry out its financial and business activities for 12 months following the reporting year and has no intention or need to liquidate, cease its financial and business activities or seek protection from creditors. Assets and liabilities are accounted for on the basis that the audited entity will be able to fulfill its obligations and realize its assets in the course of its business.

Factors influencingfor going concern

3. Since the assumption about going concern is one of the basic principles for the preparation of financial (accounting) statements, the responsibility of management of the audited entity is to assess the ability of the audited entity to continue as a going concern. activity , even if the procedure for preparing financial (accounting) statements applicable in these conditions does not provide for an express requirement for this.

4. If the audited entity has a long history of profitable transactions and free access to financial resources, its management can make its assessment without conducting a detailed analysis.

5. The audited entity’s assessment of the assumption of continuity of its activities is associated with making a professional judgment at a specific point in time about the facts of economic activity that are uncertain at the date of preparation of financial (accounting) statements. In this regard, it should be taken into account that:

Typically, the level of uncertainty associated with the outcome of an event or condition increases significantly as the period of time between the judgment and exposure to the conditional facts increases;

Any future impact of a contingent fact is based on information available at the time the financial statements are prepared, so subsequent events may conflict with professional judgment that was reasonable at the time it was made;

The size and complexity of the entity, the nature and conditions of its activities, and the extent to which the entity is exposed to external factors influence professional judgment about the impact of contingent facts.

6. Doubts regarding the applicability of the going concern assumption may arise among the auditor when reviewing financial (accounting) statements or when performing other audit procedures. Signs that may raise doubts about the applicability of the going concern assumption include the following:

a) financial characteristics:

• negative net assets or failure to meet established net asset requirements;
• borrowed funds, the repayment period of which is approaching, in the absence of a real prospect of repayment or extension of the loan term, or the unreasonable use of short-term loans to finance long-term assets;
• changing the payment scheme for goods (work performed, services rendered) to suppliers on the terms of a commercial loan or installment payment compared to settlements upon delivery of goods (work performed, services rendered);
• a significant deviation of the values ​​of the main ratios characterizing the financial position of the audited entity from normal (ordinary) values;
• failure to repay accounts payable when due;
• failure to secure financing for business development or to make other important investments;
• significant losses from operating activities;
• difficulties in complying with the terms of the loan agreement;
• arrears in payment or termination of payment of dividends;
• economically unsustainable debt obligations;
• signs of bankruptcy established by the legislation of the Russian Federation;

b) production characteristics:

• dismissal of key management personnel without proper replacement;
• loss of a market, license or key supplier;
• problems with labor resources or shortages of significant means of production;
• significant dependence on the successful completion of a specific project;
• a significant volume of sales of raw materials and supplies, comparable to or exceeding the volume of revenue from the sale of products (works, services);

c) other signs:

• failure to comply with the requirements regarding the formation of the authorized capital of the audited entity established by the legislation of the Russian Federation;
• legal claims against the audited entity that are in the process of consideration and may, if the plaintiff is successful, result in a court decision that is not feasible for this entity;
• changes in legislation or changes in the political situation.

The specified list of signs is not final. In addition, the presence of one or more signs is not always sufficient evidence of the inapplicability of the going concern assumption in the preparation of financial (accounting) statements of the audited entity.

The value of the listed signs may decrease under the influence of other signs. For example, an entity's inability to make payments as usual may be overcome by management's efforts to ensure sufficient cash flows from other sources, such as assets and liabilities, restructuring loan repayments, or attracting additional investment. Likewise, the loss of a primary supplier may be compensated by the emergence of an alternative source of supply.

7. When expressing an opinion on the reliability of the financial (accounting) statements of the audited entity, the auditor must consider the entire set of factors that have and (or) may influence the ability of this entity to continue operations and fulfill its obligations for at least 12 months following the reporting period , and these factors must be disclosed in the financial (accounting) statements. The auditor considers management's appropriate use of the going concern assumption even if the financial reporting requirements do not require management to specifically evaluate the entity's ability to continue as a going concern.

The auditor cannot predict future events or conditions that may cause the entity to cease to be a going concern, so the absence of any reference to going concern uncertainties in the auditor's report cannot be construed as a guarantee of the entity's ability to continue as a going concern.

Auditor's Planning and Review Activitiesapplication of the continuity assumptionactivities of the audited entity

8. When planning the audit, the auditor should consider whether any events or conditions exist that cast significant doubt on the auditee's ability to continue its activities. activity is continuous.

9. During the audit, the auditor should consider closely whether there is evidence of the existence of factors that cast significant doubt on the entity's ability to continue as a going concern. If such factors are identified, the auditor should consider whether they influence the auditor's assessment of the components of audit risk.

10. The auditor considers factors related to the going concern assumption during the planning of the audit, as such consideration allows for timely discussion with management of the entity being audited, and during the conduct of the audit.

11. In some cases, employees of the audited entity may themselves make a preliminary assessment of the applicability of the going concern assumption at the initial stages of the audit. In this case, the auditor reviews the assessment to determine whether the entity's management has identified any factors relevant to the going concern assumption and, if so, what management's plans are in relation thereto.

12. If the audited entity has not yet made a preliminary assessment of the applicability of the going concern assumption, then the auditor asks him whether there are any financial, operational and other factors specified in paragraph 6 of this auditing rule (standard). The auditor may request the entity to make such an assessment, particularly where the auditor has already identified factors affecting the going concern assumption.

13. The auditor analyzes the consequences of identified factors when conducting a preliminary assessment of the components of audit risk. The presence of such factors may affect the nature, timing and extent of audit procedures.

14. The auditor should review management's assessment of the entity's ability to continue as a going concern for at least 12 months following the reporting period. Management's assessment of the entity's ability to continue as a going concern is the primary factor in the auditor's analysis of the going concern assumption.

In reviewing management's assessment, the auditor considers the process by which management made its assessment, the assumptions on which that assessment was based, and management's plans for future actions. The auditor considers whether all information that became known to the auditor as a result of the audit procedures was taken into account when making the assessment.

15. The auditor should inquire from the entity as to whether the auditor is aware of any events or conditions that extend beyond the period of 12 months from the reporting date that may cast significant doubt on the entity's ability to continue as a going concern.

16. The auditor should be sensitive to the possibility of known events (planned or otherwise) or conditions that may occur in the future that may call into question the going concern basis of the financial statements. The auditor may become aware of such factors during the planning or performance of the audit, including during audit procedures relating to events occurring after the reporting date.

17. Because the degree of uncertainty associated with the consequences of any factors increases with their remoteness in time, the auditor should consider the appropriateness of additional actions only if the indications of problems associated with the going concern assumption of the audited entity are significant . The auditor has the right to require the audited entity to assess the potential significance of contingent factors in terms of their impact on the possibility of going concern.

18. The auditor is not required to develop procedures (other than making inquiries of the audited entity) to test for indications of the existence of factors that cast significant doubt on the entity's ability to continue as a going concern and that extend beyond a period of at least 12 months from the reporting date.

Additional audit proceduresif factors related to the assumption are identifiedcontinuity of activity of the audited entity

19. If factors are identified that cast significant doubt on the ability of the audited entity to continue its activity continuously, the auditor should:

• review the audited entity's plans for future operations based on its assessment of the going concern assumption;
• by performing the necessary audit procedures, collect reliable audit evidence to confirm or refute the presence of material uncertainties, including considering the consequences of any plans of the audited entity and possible mitigating circumstances;
• require the auditee's management to provide written information regarding their future plans.

20. Factors that cast significant doubt on the entity's ability to continue as a going concern may be identified during the planning of the engagement or the performance of the audit procedures. The process of considering such factors continues as the audit progresses. When the auditor believes that such factors cast significant doubt on the entity's ability to continue as a going concern, certain procedures take on additional significance. The auditor requests information from the audited entity regarding its future activities, including plans for generating revenues, borrowings and debt restructuring, reducing or deferring expenses, or increasing the size of the authorized capital. The auditor also considers whether any additional facts or information have emerged since the auditee conducted its own assessment of the going concern prospects. The auditor should seek to obtain reliable audit evidence that management's plans are feasible and that the situation will improve as a result of their implementation.

21. The number of audit procedures in the case provided for in paragraph 20 of this auditing rule (standard) includes:

• analysis and discussion with the management of the audited entity of forecasts regarding the movement of financial flows, income, etc.;
• analysis and discussion of the latest available interim financial (accounting) statements of the audited entity;
• analysis of the conditions for obtaining and repaying a loan and identifying violations of the terms of loan repayment;
• familiarization with the minutes of shareholder meetings, meetings of the board of directors and committees in order to identify any mention of financial difficulties;
• survey of lawyers and other specialists of the audited entity in order to identify information regarding the existence of lawsuits and the correctness of management’s assessment of the impact of these claims on the financial condition of the audited entity;
• checking the availability, legality and ability to enforce agreements to initiate or continue financing from affiliates and third parties, as well as assessing the ability of these parties to provide additional funds;
• studying the audited entity's plans regarding outstanding orders from its clients;
• study of conditional facts of economic activity;
• A review of events after the reporting date to determine whether such events have an impact on the entity's ability to continue as a going concern.

22. In the case where the analysis of financial flows is a significant factor affecting the going concern of the audited entity, the auditor should analyze:

• reliability of the audited entity’s information systems that provide information on the movement of financial flows;
• the validity of the assumptions on which the audited entity's forecasts are based.

In addition, the auditor compares:

• forecast data for previous periods with actual results;
• forecast data for the current period with results achieved as of the date of the audit.

Auditor's findings and audit report

23. Lack of indication in the auditor's report of serious doubt about applicability going concern assumptions cannot and should not be interpreted by the audited entity and interested users as a guarantee from the auditor that the audited entity will continue its activity and fulfill its obligations for at least 12 months following the reporting period.

24. Based on the audit evidence obtained, the auditor shall determine whether, in the auditor's judgment, a material uncertainty exists related to conditions and events that, individually or in the aggregate, cast significant doubt on the entity's ability to continue as a going concern.

25. If the going concern assumption can be considered complied with, but nevertheless there is a significant uncertainty, the auditor determines:

whether the financial (accounting) statements adequately describe the factors that cause significant doubt about the ability of the audited entity to continue its activities, and the plans of its management related to such factors;

Do the financial statements indicate that there is a material uncertainty associated with conditions or events that cast significant doubt on the entity's ability to continue as a going concern, and that the entity may therefore be unable to realize its assets and discharge its obligations in the normal course of its business.

26. If the financial statements provide adequate disclosure, the auditor should express an unqualified opinion but modify the auditor's report to include an emphatic paragraph that states that there is a material uncertainty associated with conditions or events that give rise to significant doubt. in the ability of the audited entity to continue its activities as a going concern, and reference is made to the corresponding paragraph of the explanatory note to the financial (accounting) statements.

27. If the financial (accounting) statements do not adequately disclose information, the auditor should express a qualified or adverse opinion (depending on the specific circumstances). The auditor's report must make specific reference to the existence of a material uncertainty that casts significant doubt on the entity's ability to continue as a going concern.

28. If, in accordance with the professional judgment of the auditor, the audited entity will not be able to continue as a going concern, then the auditor should express an adverse opinion, subject to the preparation of financial (accounting) statements on the basis of the going concern assumption. If, based on the additional procedures performed, the information obtained and taking into account management's plans, the auditor believes that the entity being audited will not be able to continue as a going concern, then (regardless of whether information about this has been disclosed) the auditor concludes that the in the preparation of financial (accounting) statements, the going concern assumption cannot be considered complied with and expresses a negative opinion.

29. If the management of the audited entity has come to the conclusion that the going concern assumption used in the preparation of the financial (accounting) statements cannot be considered complied with, the financial (accounting) statements must be prepared in accordance with the procedure prescribed by the legislation of the Russian Federation for such a situation . If, based on the additional procedures performed and the information obtained, the auditor concludes that such a procedure has been followed, the auditor may express an unqualified opinion provided there is adequate disclosure, but may consider it necessary to include in the auditor's report a portion of the auditor's report drawing attention to the situation in order to to draw the user's attention to the special procedure for preparing financial (accounting) statements.

30. If management of the entity refuses, at the auditor's request, to make an assessment of the entity's ability to continue as a going concern or to extend the period covered by such assessment, the auditor should consider whether modification of the auditor's report is necessary due to limitations in the scope of the auditor's work because it may not be possible for the auditor to obtain sufficient appropriate audit evidence regarding the use of the going concern assumption of the entity being audited in the preparation of financial (accounting) statements. Insufficient analytical work on the part of management of the audited entity, as a rule, cannot prevent the auditor from ascertaining the ability of the audited entity to continue as a going concern if the audited entity has a long-term track record of profitable operations and unimpeded access to financial resources.

Signing or approvalfinancial (accounting) statementssignificantly later than the reporting date

31. If the management of the audited entity signs or approves the financial (accounting) statements significantly later than the reporting date, the auditor must analyze the reasons for such a delay. In the event that the delay could be due to events or conditions affecting business continuity assumptions and, the auditor considers the need to perform additional audit procedures specified in paragraph 19 of this rules (standards) of auditing activities.

To assess the ability of the audited entity to continue its activities in the foreseeable future, the auditor is recommended to use Federal Auditing Standard No. 11 “Applicability of the going concern assumption of the audited entity.” Going concern assumption– the basic principle of preparing financial (accounting) statements. In accordance with it, it is usually assumed that the audited entity will continue to carry out its financial and economic activities for 12 months of the year following the reporting year, and has no intention or need to liquidate, terminate its financial and economic activities or seek protection from creditors. Assets and liabilities are accounted for on the basis that the audited entity will be able to fulfill its obligations and realize its assets in the course of its business.

The responsibility of management of the audited entity is to assess the ability of the audited entity to continue as a going concern, even if the applicable financial reporting procedures do not explicitly require this.

If the audited entity has a long history of profitable transactions and easy access to financial resources, its management may make its assessment without conducting a detailed analysis.

The auditor may have doubts about the applicability of the going concern assumption when reviewing financial (accounting) statements or performing other audit procedures.

In accordance with the standard, the following groups of indicators are identified, on the basis of which doubt may arise regarding the applicability of the going concern assumption:

1) financial features:

negative net assets or failure to meet established net asset requirements;

borrowed funds, the repayment period of which is approaching, in the absence of a real prospect of repayment or extension of the loan term, or the unreasonable use of short-term loans to finance long-term assets;

changing the payment scheme for goods (work performed, services rendered) to suppliers on the terms of a commercial loan or installment payment compared to settlements upon delivery of goods (work performed, services rendered);

a significant deviation of the values ​​of the main ratios characterizing the financial position of the audited entity from normal (ordinary) values;

failure to repay accounts payable when due;

failure to secure financing for business development or to make other important investments;

significant losses from operating activities;

difficulties in complying with the terms of the loan agreement;

arrears in payment or termination of payment of dividends;

economically unsustainable debt obligations;

signs of bankruptcy established by the legislation of the Russian Federation;

2) production characteristics:

dismissal of key management personnel without proper replacement;

loss of a market, license or key supplier;

problems with labor resources or shortages of significant means of production;

significant dependence on the successful completion of a specific project;

a significant volume of sales of raw materials and supplies, comparable to or exceeding the volume of revenue from the sale of products (works, services);

3) other signs:

non-compliance with the requirements regarding the formation of the authorized capital of the audited entity established by the legislation of the Russian Federation;

legal claims against the audited entity that are in the process of consideration and may, if the plaintiff is successful, result in a court decision that is not feasible for this entity;

changes in legislation or changes in the political situation.

This list of features is not exhaustive. In addition, the presence of one or more signs does not always serve as sufficient evidence of the inapplicability of the going concern assumption in the preparation of financial (accounting) statements of the audited entity.

The auditor cannot predict future events or conditions that may cause the entity to cease to be a going concern, so the absence of any reference to going concern uncertainties in the auditor's report cannot be construed as a guarantee of the entity's ability to continue as a going concern.

The auditor is not required to develop procedures (other than making inquiries of the audited entity) to examine factors that cast significant doubt on the entity's ability to continue as a going concern beyond a period of at least 12 months from the reporting date. If such factors are identified the auditor should:

review the audited entity's plans for future operations based on an assessment of its going concern assumption;

by performing the necessary audit procedures, collect reliable audit evidence to confirm or refute the presence of material uncertainties, including considering the consequences of any plans of the audited entity and possible mitigating circumstances;

require the auditee's management to provide written information regarding their future plans.

Based on the audit evidence obtained, the auditor must determine whether, in the auditor's judgment, a material uncertainty exists related to conditions and events that, individually or in the aggregate, cast significant doubt on the entity's ability to continue as a going concern.

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FEDERAL RULES

(STANDARDS) OF AUDITING ACTIVITIES

RULE (STANDARD) N 11.

APPLICABILITY OF THE CONTINUITY ASSUMPTION

ACTIVITIES OF THE AUDITED ENTITY

Introduction

1. This federal rule (standard) of auditing activities, developed taking into account international auditing standards, establishes uniform requirements for the auditor’s actions to verify the legality of the audited entity’s application of the going concern assumption when preparing financial (accounting) statements, including when considering the submitted management's assessment of the entity's ability to continue as a going concern.

2. The assumption of going concern is the basic principle of preparing financial (accounting) statements. In accordance with the going concern principle, it is generally assumed that the audited entity will continue to carry out its financial and business activities for 12 months following the reporting year and has no intention or need to liquidate, cease its financial and business activities or seek protection from creditors. Assets and liabilities are accounted for on the basis that the audited entity will be able to fulfill its obligations and realize its assets in the course of its business.

Factors influencing

for going concern

3. Because the going concern basis is a fundamental principle in the preparation of financial statements, the responsibility of management of the audited entity is to assess the ability of the audited entity to continue as a going concern, even if the financial reporting procedure applicable in the circumstances does not provide an explicit requirement for this.

4. If the audited entity has a long history of profitable transactions and free access to financial resources, its management can make its assessment without conducting a detailed analysis.

5. The audited entity’s assessment of the assumption of continuity of its activities is associated with making a professional judgment at a specific point in time about the facts of economic activity that are uncertain at the date of preparation of financial (accounting) statements. In this regard, it should be taken into account that:

As a rule, the level of uncertainty associated with the outcome of an event or condition increases significantly as the period of time between the judgment and exposure to the conditional facts increases;

any future impact of a contingent fact is based on information available at the time the financial statements are prepared, so subsequent events may conflict with professional judgment that was reasonable at the time it was made;

The size and complexity of the entity, the nature and conditions of its activities, and the degree to which the entity is affected by external factors influence professional judgment about the impact of contingent facts.

6. Doubts regarding the applicability of the going concern assumption may arise among the auditor when reviewing financial (accounting) statements or when performing other audit procedures. Signs that may raise doubts about the applicability of the going concern assumption include the following:

a) financial characteristics:

negative net assets or failure to meet established net asset requirements;

borrowed funds, the repayment period of which is approaching, in the absence of a real prospect of repayment or extension of the loan term, or the unreasonable use of short-term loans to finance long-term assets;

changing the payment scheme for goods (work performed, services rendered) to suppliers on the terms of a commercial loan or installment payment compared to settlements upon delivery of goods (work performed, services rendered);

a significant deviation of the values ​​of the main ratios characterizing the financial position of the audited entity from normal (ordinary) values;

failure to repay accounts payable when due;

failure to secure financing for business development or to make other important investments;

significant losses from operating activities;

difficulties in complying with the terms of the loan agreement;

arrears in payment or termination of payment of dividends;

economically unsustainable debt obligations;

signs of bankruptcy established by the legislation of the Russian Federation;

b) production characteristics:

dismissal of key management personnel without proper replacement;

loss of a market, license or key supplier;

problems with labor resources or shortages of significant means of production;

significant dependence on the successful completion of a specific project;

a significant volume of sales of raw materials and supplies, comparable to or exceeding the volume of revenue from the sale of products (works, services);

c) other signs:

failure to comply with the requirements regarding the formation of the authorized capital of the audited entity established by the legislation of the Russian Federation;

legal claims against the audited entity that are in the process of consideration and may, if the plaintiff is successful, result in a court decision that is not feasible for this entity;

changes in legislation or changes in the political situation.

The specified list of signs is not final. In addition, the presence of one or more signs is not always sufficient evidence of the inapplicability of the going concern assumption in the preparation of financial (accounting) statements of the audited entity.

The value of the listed signs may decrease under the influence of other signs. For example, an entity's inability to make payments as usual may be overcome by management's efforts to ensure sufficient cash flows from other sources, such as assets and liabilities, restructuring loan repayments, or attracting additional investment. Likewise, the loss of a primary supplier may be compensated by the emergence of an alternative source of supply.

7. When expressing an opinion on the reliability of the financial (accounting) statements of the audited entity, the auditor must consider the entire set of factors that have and (or) may influence the ability of this entity to continue operations and fulfill its obligations for at least 12 months following the reporting period , and these factors must be disclosed in the financial (accounting) statements. The auditor considers management's appropriate use of the going concern assumption even if the financial reporting requirements do not require management to specifically evaluate the entity's ability to continue as a going concern.

The auditor cannot predict future events or conditions that may cause the entity to cease to be a going concern, so the absence of any reference to going concern uncertainties in the auditor's report cannot be construed as a guarantee of the entity's ability to continue as a going concern.

Auditor's Planning and Review Activities

application of the continuity assumption

activities of the audited entity

8. When planning the audit, the auditor should consider whether any events or conditions exist that cast significant doubt on the entity's ability to continue as a going concern.

9. During the audit, the auditor should consider closely whether there is evidence of the existence of factors that cast significant doubt on the entity's ability to continue as a going concern. If such factors are identified, the auditor should consider whether they influence the auditor's assessment of the components of audit risk.

10. The auditor considers factors related to the going concern assumption during the planning of the audit, as such consideration allows for timely discussion with management of the entity being audited, and during the conduct of the audit.

11. In some cases, employees of the audited entity may themselves make a preliminary assessment of the applicability of the going concern assumption at the initial stages of the audit. In this case, the auditor reviews the assessment to determine whether the entity's management has identified any factors relevant to the going concern assumption and, if so, what management's plans are in relation thereto.

12. If the audited entity has not yet made a preliminary assessment of the applicability of the going concern assumption, then the auditor asks him whether there are any financial, operational and other factors specified in paragraph 6 of this auditing rule (standard). The auditor may request the entity to make such an assessment, particularly where the auditor has already identified factors affecting the going concern assumption.

13. The auditor analyzes the consequences of identified factors when conducting a preliminary assessment of the components of audit risk. The presence of such factors may affect the nature, timing and extent of audit procedures.

14. The auditor should review management's assessment of the entity's ability to continue as a going concern for at least 12 months following the reporting period. Management's assessment of the entity's ability to continue as a going concern is the primary factor in the auditor's analysis of the going concern assumption.

In reviewing management's assessment, the auditor considers the process by which management made its assessment, the assumptions on which that assessment was based, and management's plans for future actions. The auditor considers whether all information that became known to the auditor as a result of the audit procedures was taken into account when making the assessment.

15. The auditor should inquire from the entity as to whether the auditor is aware of any events or conditions that extend beyond the period of 12 months from the reporting date that may cast significant doubt on the entity's ability to continue as a going concern.

16. The auditor should be sensitive to the possibility of known events (planned or otherwise) or conditions that may occur in the future that may call into question the going concern basis of the financial statements. The auditor may become aware of such factors during the planning or performance of the audit, including during audit procedures relating to events occurring after the reporting date.

17. Because the degree of uncertainty associated with the consequences of any factors increases with their remoteness in time, the auditor should consider the appropriateness of additional actions only if the indications of problems associated with the going concern assumption of the audited entity are significant . The auditor has the right to require the audited entity to assess the potential significance of contingent factors in terms of their impact on the possibility of going concern.

18. The auditor is not required to develop procedures (other than making inquiries of the audited entity) to test for indications of the existence of factors that cast significant doubt on the entity's ability to continue as a going concern and that extend beyond a period of at least 12 months from the reporting date.

Additional audit procedures

if factors related to the assumption are identified

continuity of activity of the audited entity

19. If factors are identified that cast significant doubt on the entity's ability to continue as a going concern, the auditor should:

review the audited entity's plans for future operations based on its assessment of the going concern assumption;

by performing the necessary audit procedures, collect reliable audit evidence to confirm or refute the presence of material uncertainties, including considering the consequences of any plans of the audited entity and possible mitigating circumstances;

require the auditee's management to provide written information regarding their future plans.

20. Factors that cast significant doubt on the entity's ability to continue as a going concern may be identified during the planning of the engagement or the performance of the audit procedures. The process of considering such factors continues as the audit progresses. When the auditor believes that such factors cast significant doubt on the entity's ability to continue as a going concern, certain procedures take on additional significance. The auditor requests information from the audited entity regarding its future activities, including plans for generating revenues, borrowings and debt restructuring, reducing or deferring expenses, or increasing the size of the authorized capital. The auditor also considers whether any additional facts or information have emerged since the auditee conducted its own assessment of the going concern prospects. The auditor should seek to obtain reliable audit evidence that management's plans are feasible and that the situation will improve as a result of their implementation.

21. The number of audit procedures in the case provided for in paragraph 20 of this auditing rule (standard) includes:

analysis and discussion with the management of the audited entity of forecasts regarding the movement of financial flows, income, etc.;

analysis and discussion of the latest available interim financial (accounting) statements of the audited entity;

analysis of the conditions for obtaining and repaying a loan and identifying violations of the terms of loan repayment;

familiarization with the minutes of shareholder meetings, meetings of the board of directors and committees in order to identify any mention of financial difficulties;

survey of lawyers and other specialists of the audited entity in order to identify information regarding the existence of lawsuits and the correctness of management’s assessment of the impact of these claims on the financial condition of the audited entity;

checking the availability, legality and ability to enforce agreements to initiate or continue financing from affiliates and third parties, as well as assessing the ability of these parties to provide additional funds;

studying the audited entity's plans regarding outstanding orders from its clients;

study of conditional facts of economic activity;

A review of events after the reporting date to determine whether such events have an impact on the entity's ability to continue as a going concern.

22. In the case where the analysis of financial flows is a significant factor affecting the going concern of the audited entity, the auditor should analyze:

reliability of the audited entity’s information systems that provide information on the movement of financial flows;

the validity of the assumptions on which the audited entity's forecasts are based.

In addition, the auditor compares:

forecast data for previous periods with actual results;

forecast data for the current period with results achieved as of the date of the audit.

Auditor's findings and audit report

23. The absence in the auditor's report of an indication of serious doubt about the applicability of the going concern assumption cannot and should not be interpreted by the audited entity and interested users as a guarantee from the auditor that the audited entity will continue its activities and fulfill its obligations for at least 12 months, following the reporting one.

24. Based on the audit evidence obtained, the auditor shall determine whether, in the auditor's judgment, a material uncertainty exists related to conditions and events that, individually or in the aggregate, cast significant doubt on the entity's ability to continue as a going concern.

25. If the going concern assumption can be considered complied with, but nevertheless there is a significant uncertainty, the auditor determines:

whether the financial (accounting) statements adequately describe the factors that cause significant doubt about the ability of the audited entity to continue its activities, and the plans of its management related to such factors;

Do the financial statements indicate that there is a material uncertainty associated with conditions or events that cast significant doubt on the entity's ability to continue as a going concern, and that the entity may therefore be unable to realize its assets and discharge its obligations in the normal course of its business.

26. If the financial statements provide adequate disclosure, the auditor should express an unqualified opinion but modify the auditor's report to include an emphatic paragraph that states that there is a material uncertainty associated with conditions or events that give rise to significant doubt. in the ability of the audited entity to continue its activities as a going concern, and reference is made to the corresponding paragraph of the explanatory note to the financial (accounting) statements.

27. If the financial (accounting) statements do not adequately disclose information, the auditor should express a qualified or adverse opinion (depending on the specific circumstances). The auditor's report must make specific reference to the existence of a material uncertainty that casts significant doubt on the entity's ability to continue as a going concern.

28. If, in accordance with the professional judgment of the auditor, the audited entity will not be able to continue as a going concern, then the auditor should express an adverse opinion, subject to the preparation of financial (accounting) statements on the basis of the going concern assumption. If, based on the additional procedures performed, the information obtained and taking into account management's plans, the auditor believes that the entity being audited will not be able to continue as a going concern, then (regardless of whether information about this has been disclosed) the auditor concludes that the in the preparation of financial (accounting) statements, the going concern assumption cannot be considered complied with and expresses a negative opinion.

29. If the management of the audited entity has come to the conclusion that the going concern assumption used in the preparation of the financial (accounting) statements cannot be considered complied with, the financial (accounting) statements must be prepared in accordance with the procedure prescribed by the legislation of the Russian Federation for such a situation . If, based on the additional procedures performed and the information obtained, the auditor concludes that such a procedure has been followed, the auditor may express an unqualified opinion provided there is adequate disclosure, but may consider it necessary to include in the auditor's report a portion of the auditor's report drawing attention to the situation in order to to draw the user's attention to the special procedure for preparing financial (accounting) statements.

30. If management of the entity refuses, at the auditor's request, to make an assessment of the entity's ability to continue as a going concern or to extend the period covered by such assessment, the auditor should consider whether modification of the auditor's report is necessary due to limitations in the scope of the auditor's work because it may not be possible for the auditor to obtain sufficient appropriate audit evidence regarding the use of the going concern assumption of the entity being audited in the preparation of financial (accounting) statements. Insufficient analytical work on the part of management of the audited entity, as a rule, cannot prevent the auditor from ascertaining the ability of the audited entity to continue as a going concern if the audited entity has a long-term track record of profitable operations and unimpeded access to financial resources.

Signing or approval

financial (accounting) statements

significantly later than the reporting date

31. If the management of the audited entity signs or approves the financial (accounting) statements significantly later than the reporting date, the auditor must analyze the reasons for such a delay. If the delay could be related to events or conditions relating to the going concern assumption, the auditor considers the need to perform additional audit procedures specified in paragraph 19 of this auditing rule (standard).

The going concern assumption is one of the fundamental principles for preparing financial statements. In accordance with this principle, the audited entity will continue to carry out its financial and business activities for 12 months after the reporting period and has no intention or need to liquidate, cease operations or seek protection from creditors. The assets and liabilities of the audited entity should be taken into account on the basis that it will be able to fulfill its obligations and realize its assets in the course of future activities. Management of the audited entity must evaluate its organization's ability to continue as a going concern. If the audited entity has a long history of profitable transactions and ready access to financial resources, management may evaluate the going concern assumption without conducting a detailed analysis.

The auditor may question the applicability of the continuity assumption in the following cases:

1. financial characteristics:

— negative net assets;

- borrowed funds, the repayment period of which is approaching in the absence of a real prospect of repayment or extension of the loan term, or the unreasonable use of short-term loans to finance long-term assets;

— changing the scheme of payment for goods, works, services to suppliers on the terms of a commercial loan or deferred payments;

— significant deviation of the main ratios characterizing the financial position of the audited entity from normal values;

— failure to repay accounts payable within due time limits;

— inability to provide financing for the development of its activities and the implementation of other important investments;

— significant losses from core activities;

— arrears in payment or termination of payment of dividends;

— economic irrational debt obligations;

— signs of bankruptcy established by law.

2. production characteristics:

— dismissal of key management personnel without proper replacement;

— loss of sales markets, licenses of main suppliers;

— a problem with labor resources or a shortage of significant means of production;

— significant dependence on the successful completion of a specific project;

— a significant volume of sales of raw materials and materials, comparable to or exceeding the volume of revenue from the sale of products, works, services.

3. other signs:

— failure to comply with legal requirements regarding the formation of authorized capital;

— legal claims that are in the process of consideration and which may result in a court decision that is impossible for the audited entity.

When planning the audit, the auditor should consider whether any events or conditions exist that may cast doubt on the going concern of the entity. During the audit, the auditor should closely monitor the existence of documents that raise doubts about the going concern.

If factors are identified that cast doubt on the going concern, the auditor should:

a) check the audited entity's plans for future activities

b)gather the necessary audit evidence to confirm or refute the material uncertainty.

To confirm the presence of factors that cast doubt on going concern, the following audit procedures are applied:

a) analysis and discussion with the management of the audited entity of forecasts regarding the movement of financial flows and income;

b) analysis and discussion of interim financial statements;

c) analysis of the conditions for obtaining and repaying loans, identifying violations of the conditions for repaying loans;

d) familiarization with the minutes of the meeting of shareholders, meetings of the board of directors in order to identify any mention of financial difficulties in them;

e) survey of lawyers and other specialists of the audited entity in order to identify information regarding the existence of lawsuits and the correctness of management’s assessment of the impact of these lawsuits on the financial condition;

f) checking the legality and ability to enforce financing agreements on the part of affiliated and third parties, as well as assessing the ability of these parties to provide additional funds;

g) studying the audited entity's plans regarding outstanding orders from its clients.

If in the audit report the auditor does not indicate his doubts about the applicability of the continuity assumption, then this should not be interpreted by the audited entity and interested users as a guarantee from the auditor that the audited entity will continue its activities and fulfill its obligations.

If there are facts indicating that the continuity principle may not be applicable, the auditor must reflect this circumstance in the auditor’s report:

a) if the financial statements reliably disclose information, the auditor expresses a positive opinion, but includes an additional paragraph in the auditor’s report, which notes the presence of a material uncertainty and indicates the reasons for this;

b) if the financial statements do not reliably disclose information, the auditor expresses a qualified or negative opinion, and the report also indicates a reference to the presence of a material uncertainty.