Appendix No. 7

to the Order of the Ministry of Finance of the Russian Federation of November 9, 2016 No. 207n

The international standard of audit 570 (reviewed) "Going concern"

The International Standard of Audit (ISA) 570 (reviewed) "Going concern" should be considered together with MCA 200 "Main objectives of the independent auditor and carrying out audit according to International standards of audit".

Introduction

Scope of this standard

1. In this International Standard of Audit (ISA) the auditor's obligations during financial records audit relating to going concern question and the corresponding consequences for audit opinion are established (see the Item A1.)

Going concern principle in financial accounting

2. In case of financial accounting on the basis of going concern principle the financial reporting is constituted proceeding from assumption that the organization performs continuously the activities and will continue to perform the activities in the near future. General purpose financial statements are constituted using the going concern principle used in financial accounting, except as specified, when the management intends to liquidate the organization, to stop its activities or when it has no other real alternative, except liquidation or the termination of activities. The financial reporting of special purpose can be constituted both with use, and without use of the concept of preparation of the financial reporting in which the going concern principle used in financial accounting is applied (for example, in some jurisdictions the going concern principle used in financial accounting is not significant for some types of the financial reporting which is constituted on the basis of data of tax accounting). If application of the going concern principle used in financial accounting is lawful, assets and liabilities are reflected proceeding from the fact that the organization will be able to realize the assets and to fulfill the obligations in the course of ordinary activities (see Item A 2).

To continue the valuation liability of capability of the organization continuously the activities

3. Some concepts of preparation of the financial reporting contain the obvious requirement to management to carry out special assessment of capability of the organization to continue continuously the activities, and also requirements of standards for questions which need to be considered and information which should be opened in connection with going concern assumption. For example, according to the International accounting standard (IAS) 1 management shall execute assessment of capability of the organization to continue continuously the activities. <1> Requirements for obligation of management to carry out assessment of capability of the organization to continue continuously the activities and for disclosure of the relevant information can be also provided in the financial reporting by the laws or regulations.

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<1> IFRS (IAS) 1 "Accounts presentations", Items 25 - 26.

4. In other concepts of preparation of the financial reporting there can be no obvious requirement about need of carrying out by management of special assessment of capability of the organization to continue continuously the activities. However when the going concern principle used in financial accounting represents the fundamental principle of preparation of the financial reporting as it is specified in Item 2, by preparation of the financial reporting management shall estimate capability of the organization to continue continuously the activities even if the concept of preparation of the financial reporting does not contain the relevant obvious requirement.

5. Assessment by management of capability of the organization assumes to continue continuously the activities removal of judgment at the specific moment concerning future results of any events or conditions uncertain in essence. For such judgment the following factors matter:

- degree of the uncertainty connected with result of event or condition considerably increases in process of remoteness in origin moment time in the future of such event or condition or their result. For this reason in the majority of concepts of preparation of the financial reporting which accurately demand from management of carrying out such assessment the period concerning which the management shall consider all available information is specified;

- on judgment concerning result of events or conditions the organization size and complexity of the transactions which are carried out by it, nature and conditions of business, and also extent of influence on it of external factors make impact;

- any judgement concerning future periods is based on information which is available at the time of its removal. Owing to emergence of events after reporting date the result which is not corresponding to judgments which were reasonable at the time of their removal can be received.

Responsibility of the auditor

6. Responsibility of the auditor is in obtaining sufficient competent auditor evidences and to draw conclusion concerning legitimacy of application by management of the going concern principle used in financial accounting by preparation of the financial reporting and based on the obtained auditor evidence to draw conclusion on availability or lack of essential uncertainty concerning capability of the organization to continue continuously the activities. This responsibility remains even if the concept of preparation of the financial reporting used in case of its creation does not contain the accurate requirement about need of carrying out by management of special assessment of capability of the organization to continue continuously the activities.

7. However, as it is specified in MCA 200 <1>, potential influence of restrictions for its opportunities for identification of essential misstatements inherent in work of the auditor increases in relation to future events and conditions which can result in inability of the organization to continue continuously the activities. The auditor cannot predict such future events or conditions. Therefore, absence in audit opinion of references to essential uncertainty concerning capability of the organization to continue continuously the activities cannot be considered as guarantee that the organization is capable to continue continuously the activities.

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<1> MCA 200 "Main objectives of the independent auditor and carrying out audit according to International standards of audit", the Items A51 - A52.

The effective date

8. This standard becomes effective concerning financial records audit for the periods which are coming to an end on December 15, 2016 or after this date.

Purposes

9. The purpose of the auditor consists in that:

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