What Should Auditors Do If There Are Risk Factors That

question 20

Essay

What should auditors do if there are risk factors that indicate that the going concern assumption is at risk?

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Definitions:

Internal Rate of Return

The discount rate at which the net present value of all cash flows from a particular project equals zero.

Increased Efficiency

Improvements in operational performance that allow for the same or higher levels of output with less input, often through better processes or technology.

Annual Cash Savings

The amount of money saved in a year through various cost-cutting measures or efficiency improvements.

Salvage Value

An asset's expected selling price once it has concluded its functional life.