While conducting audit of BYN Limited, CA Y notices that company has lost one of its key markets along with important customers. Additionally,…

CA Intermediate · Auditing and Ethics · RTP · September 2024
While conducting audit of BYN Limited, CA Y notices that company has lost one of its key markets along with important customers. Additionally, several highly successful competitors have emerged, impacting business of the company. Despite the existence of material uncertainty, CA Y finds the use of going concern basis of accounting appropriate for preparation of financial statements. The company has also disclosed material uncertainty in notes to accounts adequately. How should he deal with the matter in auditor's report?

Suggested Answer and Working Notes:

As per SA 570, "Going concern”, If adequate disclosure about the material uncertainty is made in the financial statements, the auditor shall express an unmodified opinion and the auditor's report shall include a separate section under the heading "Material Uncertainty Related to Going Concern" to: Draw attention to the note in the financial statements that discloses such matters.State that these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the entity's ability to continue as a going concern and that the auditor's opinion is not modified in respect of the matter.

Topics: Completion and Review

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