Romeo Ltd is a listed public company that manufactures IT equipment. The company's financial year-end was 30thMarch 2022 and the statutory accounts are due to be signed one week after the board of directors meeting on 12th May2022. During the course of the audit you become aware that the government has reviewed its budget in an effort toreduce spending. As a result, IT expenditure had major cuts. One of the major projects to be scrapped as a result of thesecuts is the planned upgrading of the system protection software. You are aware that the company's budget for this yearincludes a major subcontract to the Department of Defence for this system. The company has been experiencing cashflow difficulties and has recently applied for a significant increase to a borrowing facility that is already fully drawn.Management is adamant that the company will continue to be viable. If necessary, it claims it can resort to cutbacks in itsfuture capital expenditure programme, seek additional off-balance sheet financing and or reschedule existing debtagreements. State the audit procedures that may be carried out to try and determine whether or not Romeo Ltd is agoing concern.

The objective of the question is to identify the audit procedures that can be used to assess whether…

Answered: Romeo Ltd is a listed public company…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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