Existing paragraph 19 is amended to read as follows:
When the auditor disclaims an opinion due to an inability to obtain sufficient appropriate audit evidence, the auditor shall:
State that the auditor does not express an opinion on the accompanying financial report;
State that, because of the significance of the matter(s) described in the Basis for Disclaimer of Opinion section, the auditor has not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial report; and
Amend the statement required by paragraph 24(b) of ASA 700, which indicates that the financial report has been audited, to state that the auditor was engaged to audit the financial report.
State in the Basis for Disclaimer of Opinion section that the auditor is unable to conclude on the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial statements and whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern.
Footnotes 5 and 6 are inserted to existing paragraph 29 and paragraph 29 is amended to read as follows:
Unless required by law or regulation, when the auditor disclaims an opinion on the financial report, the auditor’s report shall not include a section on:
(a) a Key Audit Matters section in accordance with ASA 701;4
(c) Material Uncertainty Related to Going Concern in accordance with ASA 570;[6] and
(d) or an Other Information section in accordance with ASA 720.5 (Ref: Para. A26)
Existing footnote 11 in paragraph A18 is deleted.
Existing paragraph A26 is amended to read as follows:
Providing the reasons for the auditor’s inability to obtain sufficient appropriate audit evidence within the Basis for Disclaimer of Opinion section of the auditor’s report provides useful information to users in understanding why the auditor has disclaimed an opinion on the financial report and may further guard against inappropriate reliance on them. However, communication of any key audit matters other than the matter(s) giving rise to the disclaimer of opinion may suggest that the financial report as a whole are more credible in relation to those matters than would be appropriate in the circumstances, and would be inconsistent with the disclaimer of opinion on the financial report as a whole. Similarly, it would not be appropriate to include an Other Information section in accordance with ASA 720 addressing the auditor’s consideration of the consistency of the other information with the financial report. Accordingly, paragraph 29 prohibits a Key Audit Matters section or an Other Informationcertain sections from being included in the auditor’s report when the auditor disclaims an opinion on the financial report, unless the auditor is otherwise required by law or regulation to communicate key audit matters or to report on other information.
Amendments to ASA 705 Appendix: [Aus] Illustration 1A, [Aus] Illustration 2A, [Aus] Illustration 3A, Illustration 4 and Illustration 5
The sixth point of [Aus] Illustration 1A, [Aus] Illustration 2A and [Aus] Illustration 3A are amended to read as follows:
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does not exist related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern in accordance with ASA 570.
[Aus] Illustration 1A is amended to read as follows:
Basis for Qualified Opinion
…
Going Concern
In the context of our audit of the financial report as a whole, and in forming our opinion thereon, we have concluded that management’s use of the going concern basis of accounting in the preparation of the financial report is appropriate. Based on the audit evidence obtained, we have not identified a material uncertainty related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report and are not a guarantee as to the Company’s ability to continue as a going concern.
…
[Aus] Illustration 2A is amended to read as follows:
Basis for Adverse Opinion
…
Going Concern
In the context of our audit of the financial report as a whole, and in forming our opinion thereon, we have concluded that management’s use of the going concern basis of accounting in the preparation of the consolidated financial report is appropriate. Based on the audit evidence obtained, we have not identified a material uncertainty related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report and are not a guarantee as to the Group’s ability to continue as a going concern.
…
[Aus] Illustration 3A is amended to read as follows:
Basis for Qualified Opinion
…
Going Concern
In the context of our audit of the financial report as a whole, and in forming our opinion thereon, we have concluded that management’s use of the going concern basis of accounting in the preparation of the consolidated financial report is appropriate. Based on the audit evidence obtained, we have not identified a material uncertainty related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report and are not a guarantee as to the Group’s ability to continue as a going concern.
…
Illustration 4 is amended to read as follows:
Basis for Disclaimer of Opinion
The Group’s investment in its joint venture XYZ Entity is carried at $xxx on the consolidated statement of financial position, which represents over 90% of the Group’s net assets as at 30 June 20X1. We were not allowed access to the management and the auditors of XYZ Entity, including XYZ Entity’s auditor’s audit documentation. As a result, we were unable to determine whether any adjustments were necessary in respect of the Group’s proportional share of XYZ Entity’s assets that it controls jointly, its proportional share of XYZ Entity’s liabilities for which it is jointly responsible, its proportional share of XYZ’s income and expenses for the year, and the elements making up the consolidated statement of changes in equity and the consolidated cash flow statement.
We are unable to conclude on the appropriateness of management’s use of the going concern basis of accounting in the preparation of the consolidated financial report and whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
…
Illustration 5 is amended to read as follows:
Basis for Disclaimer of Opinion
We were not appointed as auditors of the Entity until after 30 June 20X1 and thus did not observe the counting of physical inventories at the beginning and end of the year. We were unable to satisfy ourselves by alternative means concerning the inventory quantities held at 30 June 20X0 and 20X1, which are stated in the statements of financial position at $xxx and $xxx, respectively. In addition, the introduction of a new computerised accounts receivable system in September 20X1 resulted in numerous errors in accounts receivable. As of the date of our report, management was still in the process of rectifying the system deficiencies and correcting the errors. We were unable to confirm or verify by alternative means accounts receivable included in the statement of financial position at a total amount of $xx as at 30 June 20X1. As a result of these matters, we were unable to determine whether any adjustments might have been found necessary in respect of recorded or unrecorded inventories and accounts receivable, and the elements making up the statement of comprehensive income, statement of changes in equity and statement of cash flows.
We are unable to conclude on the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial report and whether 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.
…
Section Amendments to ASA 705 - Auditing Standard ASA 2025-4 Amendments to Australian Auditing Standards - Amendments to ASA 705 | Zoe