CA Rakesh Ishi
Quick Summary
1. Going Concern It was observed that the separate section on going concern was not reported by the auditor as required by SA 570 (Revised) Although there were certain events as evident from the note on Going Concern given in financial statements of the company, which could cast material uncer
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FAQ :
A common non-compliance is the auditor failing to include a separate section on going concern, even when events suggest a material uncertainty about the company's ability to continue as a going concern, as required by SA 570 (Revised).
SA 700, 'Forming an Opinion and Reporting on Financial Statements', governs the auditor's opinion and reporting requirements.
An auditor should issue a qualified opinion when there is a material effect and sufficient information is not provided in the notes, or when there are material uncertainties that cannot be adequately addressed by an EOM. This applies to issues like unconfirmed balances or undisclosed financial impacts.
It was noted that expected credit losses were not recognised on debit balances like trade receivables, and both trade receivables and payables were subject to confirmation. Given their materiality, a qualified opinion should have been issued.
SA 705 deals with 'Modifications to the Opinion', outlining when an auditor should express a qualified opinion due to insufficient information or material impact.
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