- This topic has 5 replies, 3 voices, and was last updated 6 years ago by
.
- Posts
Hi,
If I notice that a material going concern issue was not disclosed, am I correct using the following treatment: “ disclose this in uncertainty relarting to Going Concern paragraph in the audit report and then issuing a qualified audit opinion”?
If I am wrong, what is the right treatment ?
You are wrong. Please see Chapter 24 of the notes. The MURGC para can only ever be used when a MURGC is ADEQUATELY disclosed.
As is stated on page 117 “If the notes do NOT disclose the going concern uncertainty, the auditor must express a modified opinion …”As a general rule – anything reported in the auditor’s report features in only ONE place – so either:
If disclosure adequate … MURGC (refers to disclosure note) …. (has no affect on opinion)
Or
If disclosure is inadequate … modified opinion.If going concern assumption inappropriate but management disclosure treatment adequate than auditor give unmodified opinion .So in above situation MURGC would be add in audit report or not ?
NO! No amount of disclosure (about anything) can ever make up for the wrong accounting treatment.
Consider for example – a company’s major customer with a balance of $40m goes into liquidation after the year end. A note referenced to the total amount of receivables in the SoFP states that this includes “a balance of $40m due for [customer], which went into liquidation on [date]. This balance is expected to be irrecoverable and will be written off in the [next accounting period].”
The audit opinion would have to be qualified “except for” failure to recognise the credit loss in the current year.
- The topic ‘Undisclosed going concern’ is closed to new replies.