Document ID: chunk:federal_register_of_legislation:F2023C00340:reg:10:p8
Version: federal_register_of_legislation:F2023C00340
Segment Type: reg
Provision Reference: reg 10 (pt 8/29)
Character Range: 26812–29920

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 Its Assessment

    24.               If management is unwilling to make or extend its assessment when requested to do so by the auditor, the auditor shall consider the implications for the auditor's report.
    (Ref: Para. A35-Aus A35.1)

Communication with Those Charged with Governance

    25.               Unless all those charged with governance are involved in managing the entity,[6] the auditor shall communicate with those charged with governance events or conditions identified that may cast significant doubt on the entity's ability to continue as a going concern.  Such communication with those charged with governance shall include the following:

         (a)                Whether the events or conditions constitute a material uncertainty;

         (b)                Whether management's use of the going concern basis of accounting is appropriate in the preparation of the financial report;

         (c)                The adequacy of related disclosures in the financial report; and

         (d)                Where applicable, the implications for the auditor's report.

Significant Delay in the Approval of Financial Report

    26.               If there is significant delay in the approval of the financial report by management or those charged with governance after the date of the financial report, the auditor shall enquire as to the reasons for the delay.  If the auditor believes that the delay could be related to events or conditions relating to the going concern assessment, the auditor shall perform those additional audit procedures necessary, as described in paragraph 16 of this Auditing Standard, as well as consider the effect on the auditor's conclusion regarding the existence of a material uncertainty, as described in paragraph 18 of this Auditing Standard.

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Application and Other Explanatory Material

Scope of this Auditing Standard (Ref: Para 1)

    A1.             ASA 701[7] deals with the auditor's responsibility to communicate key audit matters in the auditor's report.  That Auditing Standard acknowledges that, when ASA 701 applies, matters relating to going concern may be determined to be key audit matters, and explains that a material uncertainty related to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern is, by its nature, a key audit matter.[8]

Going Concern Basis of Accounting (Ref: Para. 2)

Considerations Specific to Public Sector Entities

    A2.             Management's use of the going concern basis of accounting is also relevant to public sector entities.  For example, Australian Accounting Standard AASB 101 addresses the issue of the ability of public sector entities to continue as going concerns.[9]  Going concern risks may arise, but are not limited to, situations where public sector entities