Going Concern – Adequate disclosure

Here’s a replication from the recent technical article that covers the issue, I believe

“Under ISA 570 (Revised), if the use of the going concern basis of accounting is appropriate but a material uncertainty exists and management have included adequate disclosures relating to the material uncertainties the auditor will continue to express an unmodified opinion, but the auditor must include a separate section under the heading ‘Material Uncertainty Related to Going Concern’ and:

draw attention to the note in the financial statements that discloses the matters giving rise to the material uncertainty, and

state that these events or conditions indicate that a material uncertainty exists which 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.

The section headed ‘Material Uncertainty Related to Going Concern’ is included immediately after the Basis for Opinion paragraph but before the KAM section.

It should be noted that where the uncertainty is not adequately disclosed in the financial statements the auditor would continue to modify the opinion in line with ISA 705, Modifications to the Opinion in the Independent Auditor’s Report.”

I think that does it!