Document ID: chunk:federal_register_of_legislation:F2023C00340:reg:10:p15
Version: federal_register_of_legislation:F2023C00340
Segment Type: reg
Provision Reference: reg 10 (pt 15/29)
Character Range: 46898–49933

events or conditions that may cast significant doubt on the entity's ability to continue as a going concern.  Some financial reporting frameworks may address disclosures about:

           * Principal events or conditions;

           * Management's evaluation of the significance of those events or conditions in relation to the entity's ability to meet its obligations;

           * Management's plans that mitigate the effect of these events or conditions; or

           * Significant judgements made by management as part of its assessment of the entity's ability to continue as a going concern.

    A25.         When the financial report is prepared in accordance with a fair presentation framework, the auditor's evaluation as to whether the financial report achieves fair presentation includes the consideration of the overall presentation, structure and content of the financial report, and whether the financial report, including the related notes, represent the underlying transactions and events in a manner that achieves fair presentation.[13]  Depending on the facts and circumstances, the auditor may determine that additional disclosures are necessary to achieve fair presentation.  This may be the case, for example, when 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, and no disclosures are explicitly required by the applicable financial reporting framework regarding these circumstances.

Implications for the Auditor's Report

Use of Going Concern Basis of Accounting is Inappropriate (Ref: Para. 21)

    A26.         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 financial report is inappropriate, the requirement in paragraph 21 for the auditor to express an adverse opinion applies regardless of whether or not the financial report includes disclosure of the inappropriateness of management's use of the going concern basis of accounting.

    A27.         When the use of the going concern basis of accounting is not appropriate in the circumstances, management may be required, or may elect, to prepare the financial report on another basis (e.g., liquidation basis).  The auditor may be able to perform an audit of that financial report provided that the auditor determines that the other basis of accounting is acceptable in the circumstances.  The auditor may be able to express an unmodified opinion on that financial report, provided there is adequate disclosure therein about the basis of accounting on which the financial report is prepared, but may consider it appropriate or necessary to include an Emphasis of Matter paragraph in accordance with ASA 706[14] in the auditor's report to draw the user's attention to that alternative basis of accounting and the reasons for its