Document ID: chunk:federal_register_of_legislation:F2023C00340:reg:10:p7
Version: federal_register_of_legislation:F2023C00340
Segment Type: reg
Provision Reference: reg 10 (pt 7/29)
Character Range: 23995–27069

entity's ability to continue as a going concern and management's plans to deal with these events or conditions; and

         (b)                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.

Adequacy of Disclosures When Events or Conditions Have Been Identified but No Material Uncertainty Exists

    20.               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 provide adequate disclosures about these events or conditions.  (Ref: Para. A24–A25)

Implications for the Auditor's Report

Use of Going Concern Basis of Accounting Is Inappropriate

    21.               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

    22.               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)

         (a)                Draw attention to the note in the financial report that discloses the matters set out in paragraph 19 of this Auditing Standard; and

         (b)                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

23.               If adequate disclosure about the material uncertainty is not made in the financial report, the auditor shall: (Ref: Para. A32–A34)

         (a)                Express a qualified opinion or adverse opinion, as appropriate, in accordance with ASA 705[5]; and

         (b)                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