Section Responsibilities of the Directors for th - ASA 570 - Going Concern - December 2015 - Responsibilities of the Directors for the Financial Report | Zoe
Qualified Opinion, Material Uncertainty Exists, Inadequate Disclosure
Single Listed Company‑Corporations Act 2001
(Fair Presentation Framework)
[Aus] Illustration 2A:For purposes of this illustrative auditor’s report, the following circumstances are assumed: Audit of the financial report of a single listed company. The audit is not a group audit (i.e. ASA 600[*] does not apply). The financial report is prepared by the directors of the company in accordance with Australian Accounting Standards (a general purpose framework) and under the Corporations Act 2001. The terms of the audit engagement reflect the description of the directors’ responsibility for the financial report in ASA 210.[#] The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards). Based on the audit evidence obtained, the auditor has concluded that a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. Note yy to the financial report discusses the magnitude of financing arrangements, the expiration and the total financing arrangements; however the financial report does not include discussion on the impact or the availability of refinancing or characterise this situation as a material uncertainty. The financial report is materially misstated due to the inadequate disclosure of the material uncertainty. A qualified opinion is being expressed because the auditor concluded that the effects on the financial report of this inadequate disclosure are material but not pervasive to the financial report. Key audit matters have been communicated in accordance with ASA 701. The auditor has obtained all of the other information prior to the date of the auditor’s report and the matter giving rise to the qualified opinion on the financial report also affects the other information. In addition to the audit of the financial report, the auditor has other reporting responsibilities required under section 308(3C) of the Corporations Act 2001.
We have audited the financial report of ABC Company Ltd., (the Company), which comprises the statement of financial position as at 30 June 20X1, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, and the directors’ declaration.
In our opinion, except for the incomplete disclosure of the information referred to in the Basis for Qualified Opinion section of our report, the accompanying financial report of ABC Company Ltd., is in accordance with the Corporations Act 2001, including:
giving a true and fair view of the Company’s financial position as at 30 June 20X1, and of its performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Qualified Opinion
As discussed in Note yy, the Company’s financing arrangements expire and amounts outstanding are payable on 19 August 20X2. The Company has been unable to conclude re‑negotiations or obtain replacement financing. This situation indicates that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. The financial report does not adequately disclose this matter.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of ABC Company Ltd., would be on the same terms if given to the directors as at the time of this auditor’s report.[#]
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report.
[Descriptions of each key audit matter in accordance with ASA 701.]
Other Information [or another title if appropriate such as “Information Other than the Financial Report and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements in ASA 720 – see [Aus] Illustration 6A in Appendix 3 of ASA 720. The last paragraph of the other information section in [Aus] Illustration 6A would be customised to describe the specific matter giving rise to the qualified opinion that also affects the other information.[*]]
Responsibilities of the Directors for the Financial Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.[#]]
Auditor’s Responsibilities for the Audit of the Financial Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.]
Adverse Opinion, Material Uncertainty Exists, Inadequate Disclosure
Single listed Company‑Corporations Act 2001
(Fair Presentation Framework)
[Aus] Illustration 3A:For purposes of the illustrative auditor’s report, the following circumstances are assumed: Audit of the financial report of a single listed company. The audit is not a group audit (i.e. ASA 600[*] does not apply). The financial report is prepared by the directors of the company in accordance with Australian Accounting Standards (a general purpose framework) and under the Corporations Act 2001. The terms of the audit engagement reflect the description of the directors’ responsibility for the financial report in ASA 210.[#] The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards). Based on the audit evidence obtained, the auditor has concluded that a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern, and the company is considering bankruptcy. The financial report omits the required disclosures relating to the material uncertainty. An adverse opinion is being expressed because the effects on the financial report of such omission are material and pervasive. ASA 701 applies; however, the auditor has determined that there are no key audit matters other than the matter described in the Basis for Adverse Opinion section. The auditor has obtained all of the other information prior to the date of the auditor’s report and the matter giving rise to the adverse opinion on the financial report also affects the other information. In addition to the audit of the financial report, the auditor has other reporting responsibilities required under section 308(3C) of the Corporations Act 2001.
We have audited the financial report of ABC Company Ltd., (the Company), which comprises the statement of financial position as at 30 June 20X1, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, and the directors’ declaration.
In our opinion, because of the omission of the information mentioned in the Basis for Adverse Opinion section of our report, the financial of ABC Company Ltd., is not in accordance with the Corporations Act 2001 including:
giving a true and fair view of the Company’s financial position as at 30 June 20X1, and of its performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Adverse Opinion
The Company’s financing arrangements expired and the amount outstanding was payable on 30 June 20X1. The Company has been unable to conclude re‑negotiations or obtain replacement financing and is considering filing for bankruptcy. This situation indicates that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. The financial report does not adequately disclose this fact.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of ABC Company Ltd., would be on the same terms if given to the directors as at the time of this auditor’s report.[*]
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse opinion.
Key Audit Matters
Except for the matter described in the Basis for Adverse Opinion section, we have determined that there are no other key audit matters to communicate in our report.
Other Information [or another title if appropriate such as “Information Other than the Financial Report and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements in ASA 720 – see [Aus] Illustration 7A in Appendix 3 of ASA 720. The last paragraph of the other information section in [Aus] Illustration 7A would be customised to describe the specific matter giving rise to the adverse opinion that also affects the other information.[#]]
Responsibilities of the Directors for the Financial Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.]
Auditor’s Responsibilities for the Audit of the Financial Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.]
[Aus] Illustration 4A:For purposes of the illustrative auditor’s report, the following circumstances are assumed: Audit of the financial report of a single listed company. The audit is not a group audit (i.e. ASA 600[*] does not apply). The financial report is prepared by the directors of the company in accordance with Australian Accounting Standards (a general purpose framework) and under the Corporations Act 2001. The terms of the audit engagement reflect the description of the directors’ responsibility for the financial report in ASA 210.[#] The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards). The auditor is unable to obtain sufficient appropriate audit evidence about the company’s ability to continue as a going concern as the directors have refused to extend their going concern assessment up to the relevant period (limitation of scope). The auditor is not permitted to communicate key audit matters in accordance with ASA 705.[†] The auditor does not include an other information section in accordance with ASA 720.[§] In addition to the audit of the financial report, the auditor has other reporting responsibilities required under section 308(3C) of the Corporations Act 2001.
We were engaged to audit the financial report of ABC Company Ltd., (the Company), which comprises the statement of financial position as at 30 June 20X1, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, and the directors’ declaration.
We do not express an opinion on the accompanying financial report of the Company. Because of the significance of the matter described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on this financial report.
Basis for Disclaimer of Opinion
The Company’s financing arrangements expired and the amount outstanding was payable on 30 June 20X1. The Company has been unable to conclude re‑negotiations to obtain replacement financing. The directors have refused to extend their assessment of the Company’s ability to continue as a going concern beyond 30 September 20X1 given the uncertainty of obtaining suitable replacement financing. We have been unable to obtain alternative evidence which would provide sufficient appropriate audit evidence as to whether the Company may be able to obtain such financing, and hence remove significant doubt of its ability to continue as a going concern within twelve months of the date of this auditor’s report.
Responsibilities of the Directors for the Financial Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.]
Auditor’s Responsibilities for the Audit of the Financial Report
[Reporting in accordance with ASA 705 – see [Aus] Illustration 5 in ASA 705.]