Use of Going Concern Assumption AppropriUse of Going Concern Assumption Appropriate but a Material Uncertainty Exists

Use of Going Concern Assumption Appropriate but a Material Uncertainty Exists

1. If the auditor concludes that the use of the going concern assumption is appropriate in the circumstances but a material uncertainty exists, the auditor shall determine whether the financial report:
   1. Adequately describes the principal events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern and management’s plans to deal with these events or conditions; and
   2. Discloses clearly that there is a material uncertainty related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business. (Ref: Para. A20)
2. If adequate disclosure is made in the financial report, the auditor shall express an unmodified opinion and include an Emphasis of Matter paragraph in the auditor’s report to:
   1. Highlight the existence of a material uncertainty relating to the event or condition that may cast significant doubt on the entity’s ability to continue as a going concern; and
   2. Draw attention to the note in the financial report that discloses the matters set out in paragraph 18 of this Auditing Standard.[5] (Ref: Para. A21‑A22)
3. If adequate disclosure is not made in the financial report, the auditor shall express a qualified opinion or adverse opinion, as appropriate in accordance with ASA 705.[6] The auditor shall state in the auditor’s report that there is a material uncertainty that may cast significant doubt about the entity’s ability to continue as a going concern. (Ref: Para. A23‑Aus A24.2)