Question 1

SECTION A - CASE 2: AERODYNAMICS LOGISTICS

AeroDynamics Logistics is a drone delivery startup. You are the audit senior for the year ended 30 September 20X6. During the audit, you note the following:
1. The company has a significant cash burn rate and its main operating license expires in two months, with renewal pending a safety review.
2. On 15 October 20X6, a major warehouse fire destroyed 40% of their drone fleet.
3. A key customer, accounting for 25% of revenue, declared bankruptcy on 5 November 20X6.
The financial statements are due to be signed on 30 November 20X6.

Which TWO of the following audit procedures should be performed to assess whether AeroDynamics Logistics is a going concern? (Select TWO)

Accepted Answer

Select procedures that directly evaluate the company's ability to continue operating in the foreseeable future.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Selecting standard substantive procedures (like asset verification) instead of forward-looking going concern procedures.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA AA — Audit and Assurance Practice Exam 2

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