KHJ News sought an explanation from a local Certified Public Accountant regarding the finding by ASTCA auditors, Aldrich CPAs and Advisors LLP, as noted in ASTCA’s Fiscal Year 2016 audit that the authority was a going concern.
The CPA who did not want to be named explained that the auditors have raised substantial doubt about the authority’s ability to continue as a going concern.
The audit report issued April 27 said the accompanying financial statements have been prepared assuming ASCTA will continue as a going concern.
It goes on to say that ASTCA has incurred substantial losses in 2016 and 2015, has negative working capital, and negative cash flows from operations which raise substantial doubt about its ability to continue as a going concern at April 27, 2017.
The CPA said when an auditor conducts an examination of the accounting records of a company, he or she has an obligation to review its ability to continues as a going concern, if the assessment is that there is a substantial doubt regarding the company’s ability to continue in the future a going concern qualification must be included in his or her opinion of the company’s financial statements.
The CPA said an auditor who is considering issuing a going concern qualification will discuss the issue with management in advance so that management can create a recovery plan that may be sufficient to keep the auditor from issuing the qualification.
ASTCA recently obtained a second loan from the ASG Employees retirement Fund, in addition to a 2016 loan of which a balance of $3.1 million is remaining.
The Retirement Fund board had asked ASTCA for its latest financial statement.
Some are questioning if the Board of Directors conducted due diligence in its review of the loan, given the going concern qualification in the 2016 financial audit of ASTCA.
