Audit Conclusions and ReportingAudit Conclusions and Reporting

Audit Conclusions and Reporting

Going Concern Basis Considered Appropriate

35 When there are no other matters requiring modification to the auditor’s report and the auditor is satisfied that it is appropriate, based on all reasonably foreseeable circumstances facing the entity, for management to prepare the financial report on the going concern basis, the auditor shall issue an unmodified auditor’s report in accordance with ASA 700 The Auditor’s Report on a General Purpose Financial Report.

36 When consideration of mitigating factors, in particular management’s plans, have had a significant effect upon the auditor in forming the opinion that the going concern basis is appropriate, the auditor shall specifically consider the adequacy of the disclosure of the following matters in the financial report:

(a) the principal conditions which caused the auditor to question the going concern basis, including as appropriate, management’s evaluation of their significance and possible effects; and

(b) management’s plans and other mitigating factors, including as appropriate, relevant prospective financial information.

If the disclosures considered necessary by the auditor are not made, the auditor shall express a qualified opinion on the basis of the lack of disclosure in accordance with ASA 701 Modifications to the Auditor’s Report.

Material Uncertainty

37 Based on the audit evidence obtained, the auditor shall determine if, in the auditor’s judgement, a material uncertainty exists related to events or conditions that alone or in aggregate, may cast significant doubt on the entity’s ability to continue as a going concern.

38 A material uncertainty exists when the magnitude of its potential impact is such that, in the auditor’s judgement, clear disclosure of the nature and implications of the uncertainty is necessary for the presentation of the financial report not to be misleading.

Going Concern Assumption Appropriate but a Material Uncertainty Exists

39 When this uncertainty is adequately disclosed in the financial report, the auditor’s report shall include an emphasis of matter section in accordance with ASA 701. An emphasis of matter section regarding a going concern uncertainty shall:

(a) state clearly that there is significant uncertainty whether the entity will continue as a going concern and, therefore, whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report; and

(b) adequately describe, or refer to a note to the financial report that adequately describes:

(i) the principal conditions that raise doubt about the entity’s ability to continue as a going concern; and