Adequacy of DisclosuresAdequacy of Disclosures

Adequacy of Disclosures

Adequacy of Disclosures When No Material Uncertainty Exists

1. If events or conditions have been identified that may cast significant doubt on the entity’s ability to continue as a going concern but, based on the audit evidence obtained, the auditor concludes that no material uncertainty exists, the auditor shall evaluate whether, in view of the requirements of the applicable financial reporting framework, the financial report provides adequate disclosures about these events or conditions, including, as applicable, when significant judgements are made by management in concluding that there is no material uncertainty. (Ref: Para. A73–A76)

Adequacy of Disclosures When a Material Uncertainty Exists

1. If the auditor concludes that management’s use of the going concern basis of accounting is appropriate in the circumstances but a material uncertainty exists, the auditor shall determine whether the financial report: (Ref: Para. A77)
   1. Adequately discloses 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 for future actions to address 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 the entity may be unable to realise its assets and discharge its liabilities in the normal course of business and continue its operations for the foreseeable future.

When a material uncertainty exists, adequate disclosure of the nature and implications of the uncertainty is necessary for:

1. In the case of a fair presentation financial reporting framework, the fair presentation of the financial report, or
2. In the case of a compliance framework, the financial report not to be misleading.