Ms. Sherry Hazel
Audit and Attest Standards
American Institute of Certified Public Accountants
1211 Avenue of the Americas
New York, NY 10036-8775

September 2, 2016

Dear Ms. Hazel:

We appreciate the opportunity to comment on the proposed Statement on Auditing Standards, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern (the “Proposed SAS”). We acknowledge the importance of transparent disclosures to improve the user’s ability to evaluate and analyze an entity’s ability to continue as a going concern and are generally supportive of the Proposed SAS. We believe the Proposed SAS will help to clarify the auditor’s responsibility in evaluating management’s assessment and promote consistency in auditor reporting on going concern matters.

We offer the following suggestions for the Auditing Standards Board’s (ASB) consideration in finalizing the Proposed SAS for issuance.

We agree that in connection with the audits of single financial statements and specific elements, accounts, or items of a financial statement, the auditors’ evaluation of fair presentation includes a review of the entity’s disclosures regarding its risks and uncertainties. However, we believe it will be challenging to provide users information regarding an entity’s ability to continue as a going concern when only specific elements, accounts, items or single financial statements are being audited, because the auditor may not identify such matters by performing its audit procedures. For example, to evaluate an entity’s ability to continue as a going concern the auditor considers evidence related to the entity as a whole, considering, but not limited to, conditional and unconditional obligations, liquidity resources, available assets and ability to generate cash flows. Audits performed for single financial statements, specific elements, accounts, or items of a financial statement typically do not consider evidence related to the entity as a whole based upon what is in scope for the audit. Therefore, we believe it would be significant effort as auditors will have to significantly expand the scope in performing their procedures in order to evaluate the entity’s ability to continue as a going concern and is not the objective of these audits. We additionally have considered, with inclusion of the aforementioned audits, there may become a wider expectation gap of users of the financial statements if we were required to opine on an entity’s ability to continue as a going concern, directly related to an incomplete presentation of the financial information.

We, therefore, recommend that audits of single financial statements and specific elements, accounts, or items of a financial statement not be considered for inclusion under the Proposed SAS. Rather, we support the use of evaluating disclosures related to risk and uncertainties to achieve fair presentation.

In paragraph 10b of the objectives the Proposed SAS states, “To conclude, based on the audit evidence obtained, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern for a reasonable period of time.” The objective could be read that the auditor’s conclusion is based only upon the identified conditions or events with no consideration of management’s plans to alleviate the substantial doubt considerations. We acknowledge an evaluation of substantial doubt is considered before managements’ plans; however, the final conclusion related to substantial doubt also considers management’s plans and whether it effectively is implemented and alleviates the identified conditions and events that raise substantial doubt. As a result, we recommend removing conditions or events from the objective to discuss the conclusion more broadly. We propose the following edits to paragraph 10b. New language is in boldface italics; deleted text is in strikethrough.

10b. To conclude, based on the audit evidence obtained, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern for a reasonable period of time exists.

If accepted a similar edit should be made in paragraph 7b in explaining the responsibilities of the auditor.

We appreciate the opportunity to express our views and would be pleased to discuss our comments or answer any questions you may have. Please contact Guy Raymaker (973-236-4180) regarding our submission.

Sincerely,