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Assessment Tools For Accounting Policy

Table 3:

Analysis of the signs of the inability of the audited entity to continue its activities continuously for the foreseeable future
Financial features:
The negative amount of net assets or failure to comply with the established requirements for net assets;
Borrowed funds, the repayment period of which is approaching, with the real lack of the prospects for repayment or extension of the loan term or unreasonable use of short-term loans to finance long-term assets;
The change in the scheme for payment for goods (work performed, services rendered) to suppliers on the terms of the commercial loan or installment payment as compared with calculations as the goods are delivered (work performed, services rendered);
The significant deviation of the values of the main ratios characterizing the financial position of the audited entity from the normal (ordinary) values;
Inability to repay accounts payable in due time;
Inability to provide financing for the development of activities or other important investments;
Significant losses from core activities;
Difficulties in complying with the terms of the loan agreement;
Arrears of payment or termination of payment of dividends;
Economically unsustainable debt obligations;
Signs of bankruptcy established by the legislation of the Russian Federation;
Production signs:
Dismissal of the key management personnel without proper replacement;
Loss of market, license or primary supplier;
Labor problems or a shortage of significant means of production;
Significant dependence on the successful implementation of the specific project;
The significant volume of sales of raw materials and materials, comparable to or exceeding the amount of revenue from sales of products (works, services);
Other signs:
Non-compliance with the requirements for the formation of the authorized capital of the audited entity established by The legislation of the russian federation;
Lawsuits against the audited entity that are under consideration and may, if the plaintiff is successful, result in a court decision that is not enforceable for that person;
Amending legislation or changing the political situation;
Analysis and discussion with the management of the audited entity of forecasts regarding the movement of financial flows, income, etc .;
Analysis and discussion of the latest available interim financial statements of the audited entity;
Analysis of the conditions for obtaining and repaying a loan and identifying violations of the conditions for repaying a loan;
Familiarization with the minutes of meetings of shareholders, meetings of the board of directors and committees in order to identify references to financial difficulties in them;
A survey of the lawyers and other specialists of the audited entity in order to identify information regarding the existence of legal claims and the correctness of management's assessment of the impact of these claims on the financial condition of the audited entity;
Checking the availability, legality and possibility of ensuring the implementation of agreements on the beginning or continuing financing by affiliates and third parties, as well as assessing the ability of these persons to provide additional funds;
Study of the plans of the audited entity regarding outstanding orders of its clients;
Study of the conditional facts of economic activity;
Analysis of events after the reporting date in order to determine whether such events affect the ability of the audited entity to continue its continuous activities;
A request from the managers of the audited entity to submit in writing information regarding their future plans of activity;
Study of the forecast data of the audited entity.
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