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Hello
I have a question here relate to GC.
so, if the client (listed company) has a clear going concern issue and it is material (i suppose all going concern issues are materials) what should we do on audit report :
1.when adequately disclosed ;
2. when inadequately disclosed by the management?please correct me if i am wrong:
1. i would add MURGC under basis of opinion before KAM and explain the uncertainty,make clear that management has fully disclosed and audit opinion is unmodified due to this respect.2. i would also add MURGC under basis for opinion before KAM and explain the uncertainty, and make clear that the management has not disclosed in full details, and audit opinion is modified due to this respect. no explanation need under basis for opinion about the GC again because it has explained under MURCG section.
Am i right on that please?
Thanks
JennyIt stands for Material Uncertainty Relating to Going Concern.
Jenny, you are best to ask this question on the Ask Your Tutor forum, as only students post on here, and your question is best answered by a tutor.
I think I know the answer, but please ask here;
https://opentuition.com/forum/ask-acca-tutor-forums/ask-the-tutor-acca-p7-exams/Mike will happily respond
Hello Fbawany
thanks. yes I have posted in there and Mike did answer me. but it was closed straight after he posted so I couldn’t able to ask more on that.
please can you explain to me, I heard if the management did not disclose the uncertainty at all, then there is no need to add MURGC at all on the report. so where is the explanation going to be ? I would explain the modification in the basis paragraph. but someone was saying that to add Emphasis of matter to explain. I just a bit confused on that. could you able to help me on that please?
Thanks
JenIn my understanding;
the Emphasis of Matter (EOM) is used, if the material uncertainty has been adequately disclosed. So therefore just emphasising the matter to the readers of the audit report. The audit opinion is unmodified, as the financial statements still show a true and fair view
if the material uncertainty hasnt been disclosed, then you modify your opinion, with either a qualified or adverse opinion and use the basis for modified opinion paragraph to explain the material uncertainty that management have not disclosed.
as I said before, it is best to check this again with Mike, maybe post another question for him, but I think what i’m telling you above is correct.
Regards
Hi fbawany
The article in July 16 says that emphasis of matter is no longer appropriate on deal with going concern issues which was fully disclosed. Audit opinion is unmodified
I am having problems to deal with when disclosure is inadequate and didn’t disclose it at all. I don’t know whether to addMURGC or not and where to explain the modification (under MURGC if added or basis for a opinion section) Of course the opinion on the both of them would be modified.
Thanks
Jen
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