- This topic has 5 replies, 2 voices, and was last updated 6 years ago by
.
- Posts
If Material Uncertainty regarding going concern is disclosed, this will be dealt with MURGC para.
But if not disclosed, this will lead to qualified or adverse opinion? Please clarify
Yes and Yes.
MURGC draws users’ attention to the material uncertainty – the user can then read for themselves the details in the note disclosure.
If it’s not adequately disclosed in the notes the audit opinion will most likely modify the audit opinion “except for” and the basis of opinion will include the details that the auditor thinks the users will need.
The practical effect of this is that management is encouraged to made adequate disclose and have an auditor’s report with a MURGC section that does not modify the audit opinion – rather than fail to make adequate disclose and face a modified opinion.
Kim, Could there be a case when the auditor has to express an adverse opinion if Material Uncertainty is not disclosed (e.g Company is not going concern without parent support and Parent Co is not willing to support the letter of comfort)
If the auditor is of the opinion that there is more certainty that the company is NOT a going concern (i.e. there is evidence that the situation is more serious than there being some uncertainty) such that the going concern basis is NOT appropriate for the preparation of the financial statements, this would affect the financial statements as a whole. As this would be pervasive, an adverse opinion would be appropriate.
- The topic ‘Audit Opnion’ is closed to new replies.