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Material uncertainty relating to going concern

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › Material uncertainty relating to going concern

  • This topic has 7 replies, 3 voices, and was last updated 3 years ago by Kim Smith.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • August 6, 2021 at 6:10 pm #630617
    RazaHussain7292
    Member
    • Topics: 7
    • Replies: 5
    • ☆

    If management not agree to add disclosure in financial statement regarding uncertainties around going concern, we will give qualified opinion. In this case should we also need to add paragraph “material uncertaintiy relating to going concern” after the paragraph of “basis for qualified opinion”?

    Or in this case we have no need for paragraph ” material uncertainty related to going concern” because we have already give qualified opinion?

    August 6, 2021 at 6:54 pm #630619
    Kim Smith
    Keymaster
    • Topics: 133
    • Replies: 8300
    • ☆☆☆☆☆

    See s.4 of chapter 24 – where it states “going concern issues are reported only ONCE in the auditor’s report”.

    MURGC (adequate disclosure) and Qualified opinion (inadequate disclosure) are mutually exclusive – it’s either one or the other.

    August 7, 2021 at 7:47 am #630645
    RazaHussain7292
    Member
    • Topics: 7
    • Replies: 5
    • ☆

    Thanks

    August 7, 2021 at 9:03 am #630648
    Kim Smith
    Keymaster
    • Topics: 133
    • Replies: 8300
    • ☆☆☆☆☆

    You’re welcome!

    August 10, 2021 at 6:36 am #630963
    tszhacherry
    Member
    • Topics: 2
    • Replies: 4
    • ☆

    Hi Kim,

    In s.4 of chapter 24 – where it states “going concern issues are reported only ONCE in the auditor’s report”, could you please tell us that

    If the auditor had been worried about going concern but concludes that in fact, no material
    uncertainty exists , there will clearly be no MURGC section, but it may be included as a KAM, if
    it meets the definition of a KAM.

    #Can I include it as EoM paragraph, not in KAM for the no material uncertainty exist?

    Regards,
    Cherry

    August 10, 2021 at 6:57 am #630967
    Kim Smith
    Keymaster
    • Topics: 133
    • Replies: 8300
    • ☆☆☆☆☆

    Short answer NO
    Before MURGC, the auditor could draw attention to ADEQUATELY disclosed going concern uncertainty in an EoM. But MURGC is specifically the emphasis of the matter that is going concern – so EoM can no longer be used for going concern. (I hope you can appreciate that it would be confusing if two different paras could be used for the same thing!)

    If there is NO material uncertainty, there would be NO requirement for going concern disclosure … so NO note … so you couldn’t use EoM in any case – an EoM MUST be cross-reference to a note.

    August 10, 2021 at 10:51 am #631009
    tszhacherry
    Member
    • Topics: 2
    • Replies: 4
    • ☆

    Hi Kim,

    Thank you so much! It”s so clear, many thanks!

    Regards,
    Cherry

    August 10, 2021 at 11:25 am #631014
    Kim Smith
    Keymaster
    • Topics: 133
    • Replies: 8300
    • ☆☆☆☆☆

    You’re very welcome!

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Viewing 8 posts - 1 through 8 (of 8 total)
  • The topic ‘Material uncertainty relating to going concern’ is closed to new replies.

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