Material uncertainty related to going concern
A material uncertainty related to going concern exists when events or conditions cast significant doubt on the entity’s ability to continue and their potential effects require appropriate disclosure for fair presentation or the applicable framework. Under ISA 570 (Revised 2024), if the going-concern basis is appropriate and the material uncertainty is adequately disclosed, the auditor normally gives an unmodified opinion and includes a separate Material Uncertainty Related to Going Concern section. Inadequate disclosure or an inappropriate basis changes the reporting analysis.
Worked example
A company depends on refinancing a major debt. Management adequately explains the material uncertainty and the basis remains appropriate, so the auditor reports the uncertainty in the required separate section alongside an unmodified opinion, assuming no other modification.
Common mistake
Do not automatically issue an adverse opinion solely because a material uncertainty exists, or substitute an emphasis-of-matter paragraph for the required going-concern section.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AA | Direct | September 2026–June 2027 |
| ACCA | AAA (INT) | Direct | September 2026–June 2027 |