) You are the manager responsible for performing hot reviews on audit files where there is a potential disagreement betw

[answerhappygod]

) You are the manager responsible for performing hot reviews on
audit files where there is a potential disagreement between your
firm and the client regarding a material issue. You are reviewing
the going concern section of the audit file of Rockland Company
Ltd., a client with considerable cash flow difficulties and other
less significant operational indicators of going concern problems.
The working papers indicate that Rockland DC: ACD01-F004 Company is
currently trying to raise finance to fund operating cash flows, and
state that if the finance is not received, there is significant
doubt over the going concern status of the company. The working
papers concluded that the going concern assumption is appropriate,
but it is recommended that the financial statements should contain
a note to explain the cash flow problems faced by the company,
along with a description of the finance being sought, and an
evaluation of the going concern status of the company. The
directors do not wish to include the note in the financial
statements.
Required:
(i) Consider and comment on the possible reasons why the
directors of Rockland Company Ltd. are reluctant to provide the
note to the financial statements.
(ii) Discuss the implications for the auditors if the directors
refuse to include the disclosure note.