Document ID: chunk:federal_register_of_legislation:F2023C00340:reg:10:p16
Version: federal_register_of_legislation:F2023C00340
Segment Type: reg
Provision Reference: reg 10 (pt 16/29)
Character Range: 49688–52741

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 use.

Use of the Going Concern Basis of Accounting Is Appropriate but a Material Uncertainty Exists (Ref: Para. 22‒23)

    A28.         The identification of a material uncertainty is a matter that is important to users' understanding of the financial report.  The use of a separate section with a heading that includes reference to the fact that a material uncertainty related to going concern exists alerts users to this circumstance.

    A29.         Appendix 2 provides illustrations of the statements that are required to be included in the auditor's report on the financial report when Australian Accounting Standards are the applicable financial reporting framework.  If an applicable financial reporting framework other than Australian Accounting Standards is used, the illustrative statements presented in Appendix 2 may need to be adapted to reflect the application of the other financial reporting framework in the circumstances.

    A30.         Paragraph 22 establishes the minimum information required to be presented in the auditor's report in each of the circumstances described.  The auditor may provide additional information to supplement the required statements, for example to explain:

           * That the existence of a material uncertainty is fundamental to users' understanding of the financial report;[15] or

           * How the matter was addressed in the audit.  (Ref: Para. A1)

Adequate Disclosure of a Material Uncertainty Is Made in the Financial Report (Ref: Para. 22)

    A31.         [Aus] Illustration 1A of Appendix 2 is an example of an auditor's report when the auditor has obtained sufficient appropriate audit evidence regarding the appropriateness of management's use of the going concern basis of accounting but a material uncertainty exists and disclosure is adequate in the financial report.  The Appendix of ASA 700 also includes illustrative wording to be included in the auditor's report for all entities in relation to going concern to describe the respective responsibilities of those responsible for the financial report and the auditor in relation to going concern.

Adequate Disclosure of a Material Uncertainty Is Not Made in the Financial Report (Ref: Para. 23)

    A32.         [Aus] Illustrations 2A and 3A of Appendix 2 are examples of auditor's reports containing qualified and adverse opinions, respectively, when the auditor has obtained sufficient appropriate audit evidence regarding the appropriateness of the management's use of the going concern basis of accounting but adequate disclosure of a material uncertainty is not made in the financial report.

    A33.         In situations involving multiple uncertainties that are significant to the financial report as a whole, the auditor may consider it appropriate in extremely rare