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Hi, there is a question in the chapter 6 test questions that says: if management use of going concern basis of accounting is appropriate but the material uncertainty has not be properly disclose in a note to the FS, what form of auditor’s report should be issued?
The answer is a qualified opinion with a material uncertainty related to going concern section. I understand the qualified option because is not adequately disclose but in the notes says that if the opinion is modified there will not be a material uncertainty related to going concern section. Can you please clarify this?
Thanks
The answer is badly worded. Itmdoes not mean that a MURGC paragraph is inserted in the audot report. It is trying to say that the audit opinion will state that the reason for the qualification is that there is a MURGC but that there is no disclosure in the notes. Fuller details would also be, supplied in the Basis for Qualified Opinion paragraph.
Thank you both for pointing this out. The correct answer is a qualified opinion on grounds of material misstatement. There would not be a MURGC section because this can only be used when the use of the basis is adequately disclosed. So the reasons for the qualification – as Ken states – would be in the basis paragraph.
I will correct the quiz.
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