问题详情

MercuryMotoringCo(Mercury)specialisesinmanufacturingenginepartsformotorcarsandthecompanyhasadiversecustomerbasebutsevensignificantcustomers.Thecompany’syearendwas30September2015.
Duringtheyear,anumberofthecompany’ssignificantcustomershaveexperiencedafallinsales,andconsequentlytheyhavepurchasedfeweritemsfromMercury.Asaresult,Mercuryhaspaidanumberofitssupplierslaterthanusualandsomeofthemhavewithdrawncredittermsmeaningthecompanymustpaycashondelivery.OneofMercury’smainsuppliersisthreateninglegalactiontorecoverthesumsowing.Asaresultoftheincreasedlevelofpayables,thecompany’scurrentratiohasfallenbelow1to0·9forthefirsttime.
Mercuryhasproducedacashflowforecastto30June2016andthisshowsnetcashoutflowsuntilMay2016.Mercuryhasaloanof$2·3millionwhichisdueforrepaymentinfullby30September2016.
ThefinancedirectorhasjustinformedtheauditmanagerthatthereisapossiblechangeinlegislationwhichwillresultinoneofMercury’stopproductlinesbecomingobsoleteasitwillnotcomplywiththeproposedlaw.Thepreparedcashflowforecastsdonotreflectthispossibleevent.
Required:
(a)ExplainFIVEpotentialindicatorsthatMercuryMotoringCoisNOTagoingconcern.(5marks)
(b)Describetheauditprocedureswhichyoushouldperform.inassessingwhetherornotMercuryMotoringCoisagoingconcern.(5marks)


请帮忙给出正确答案和分析，谢谢！