The Auditor's Consideration Of An Entity's Ability To Continue As A Going Concern

As a result of its Clarity Project, the Auditing Standards Board (ASB) has issued Statement on Auditing Standards (SAS) No. 126, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern (Redrafted), to supersede SAS No. 59, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern, as amended (AICPA, Professional Standards, AU sec. 341 and AU-C sec. 570). SAS No. 126 does not change or expand SAS No. 59, as amended, in any significant respect.

The ASB has moved forward with the clarity redraft of SAS No. 59, as amended, so that it is consistent with the format of the other clarified SASs that were recently issued as SASs No. 122, Statements on Auditing Standards: Clarification and Recodification, No. 124, Financial Statements Prepared in Accordance With a Financial Reporting Framework Generally Accepted in Another Country, and No. 125,Alert That Restricts the Use of the Auditorvsquo;s Written Communication.

However, the ASB decided to delay convergence with International Standard on Auditing 570, Going Concern, pending the Financial Accounting Standards Boardtsquo;s (FASB) anticipated development of accounting guidance addressing going concern. FASB issued an exposure draft, Going Concern, in October 2008, but based on recent decisions, FASB has divided the project into two separate and distinct phases. As a result, FASB projects to issue an exposure draft that addresses Phase 1, mdquo;The Liquidation Basis of Accounting,adquo; in the second quarter of 2012, and to reissue an exposure draft that addresses Phase II, mdquo;Going Concern,/dquo; in the fourth quarter of 2012.

SAS No. 126 addresses the auditor