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Greetings Tutor, I hope you are doing well, can you please help me with ISA 570 (Going Concern).
One of the responsibility of an Auditor under ISA 570 is
“If events or conditions have been identified that may cast significant doubt on entity’s ability to continue as a going concern, that auditor shall obtain sufficient appropriate audit evidence to determine whether or not a material uncertainty exists related to that event or condition”.Can you tell me what is meant by “material uncertainty”? and why are we assessing material uncertainty?
Short answer – because the auditor is required to report on it (see 3.5 on page 29 of our notes and the related para in the illustrative example on page 33.
The term “material uncertainty” comes from IAS 1 (assumed knowledge) meaning uncertainties related to events or conditions which may cast significant doubt on the entity’s ability to continue as a going concern. IAs 1 REQUIRES that such uncertainties to be disclosed in the financial statements.
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