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For an audit: If client is public instead of private, what additional factors might influence your...

For an audit: If client is public instead of private, what additional factors might influence your decision to issue a going concern opinion?

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Answer #1

When a company is public rather than private, issuing a going concern opinion involves assessing the following additional factors. These factors is largely due to the fact that public companies have more users and their earnings can impact markets which is not the case of private companies:

  • The current market sentiment: If the market is expecting positive news and will be caught by surprise, the company may need a cease-trade order from the stock exchange when reporting earnings.
  • Relationships with special interest users: If, for example, a company has multiple creditors, it is advised that these creditors are contacted as soon as the earnings are released in order to explain the steps to repay debt.
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