If the financial statements have been prepared using the going concern basis of accounting but, in the auditor’s judgment, management’s use of the going concern basis of accounting in the preparation of the financial statements is inappropriate, the auditor shall express an adverse opinion.
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” Adequate Disclosure of a Material Uncertainty Is Not Made in the Financial Statements
If adequate disclosure about the material uncertainty is not made in the financial statements, the auditor shall:
(a) Express a qualified opinion or adverse opinion, as appropriate, in accordance with SA 705; and
(b) In the Basis for Qualified (Adverse) Opinion section of the auditor’s report, state that a material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern and that the financial statements do not adequately disclose this matter.
If management is unwilling to make or extend its assessment when requested to do so by the auditor, the auditor shall consider the implications for the auditor’s report.
