Implications for the Auditor’s ReportImplications for the Auditor’s Report

Implications for the Auditor’s Report

Use of Going Concern Basis of Accounting Is Inappropriate

1. If the financial report has been prepared using the going concern basis of accounting but, in the auditor’s judgement, management’s use of the going concern basis of accounting in the preparation of the financial report is inappropriate, the auditor shall express an adverse opinion. (Ref: Para. A26–A27)

Use of Going Concern Basis of Accounting Is Appropriate but a Material Uncertainty Exists

Adequate Disclosure of a Material Uncertainty Is Made in the Financial Report

1. If adequate disclosure about the material uncertainty is made in the financial report, the auditor shall express an unmodified opinion and the auditor’s report shall include a separate section under the heading “Material Uncertainty Related to Going Concern” to: (Ref: Para. A28‑A31, A34)
   1. Draw attention to the note in the financial report that discloses the matters set out in paragraph 19 of this Auditing Standard; and
   2. State that these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern and that the auditor’s opinion is not modified in respect of the matter.

Adequate Disclosure of a Material Uncertainty Is Not Made in the Financial Report

1. If adequate disclosure about the material uncertainty is not made in the financial report, the auditor shall: (Ref: Para. A32–A34)
   1. Express a qualified opinion or adverse opinion, as appropriate, in accordance with ASA 705[5]; and
   2. In the Basis for Qualified (Adverse) Opinion section of the auditor’s report, state that a material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern and that the financial report does not adequately disclose this matter.

Management Unwilling to Make or Extend Its Assessment

1. If management is unwilling to make or extend its assessment when requested to do so by the auditor, the auditor shall consider the implications for the auditor’s report.
   (Ref: Para. A35-Aus A35.1)