Memo

FROM: Joshua Moore

DATE: 2/01/2015

SUBJECT: Matching Principle

Purpose

Through the course of the audit of the client, several principles will be examined to determine whether they are currently effective. The going concern principle is one of the principles that will be examined. Whether or not the entity meets the guidelines of the going concern principle will directly affect the results of the assessment.

Background

The financial statements should present fairly in accordance with the generally accepted accounting principles the financial position, results of operations and cash flows of an entity, and be prepared on a going concern basis.

The going concern principle assumes that a company will continue to exist long enough to meet its goals and commitments. This principle, therefore, assumes that the company will not liquidate in the foreseeable future. If evidence leads the auditor to believe that the company will liquidate, an accountant is obligated to disclose this in the assessment. In order to properly present the financial statements in accordance with the GAAP there are basic requirements for the standard that must be met.

* Management is required to make an assessment of an entity’s ability to continue as a going concern.

* In making its assessment, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the balance sheet date.

* Disclosure is required of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern.

* When financial statements are not prepared on a going concern basis, that fact must be disclosed, together with the basis on which the financial statements are prepared and the reason why the entity is not regarded as a going concern.

Current Procedure

Management follows all of the basic requirements stated above in order to meet the...