Acca aaa s21 Notes

7. Other reporting responsibilities
An auditor’s report will explicitly include an audit opinion on the financial statements. In some 
jurisdictions, the auditor may have additional responsibilities to report on matters such as the 
adequacy of accounting books and records. These may be included in the auditor's report under a 
suitably headed section (e.g. ‘Report on Other Legal and Regulatory Requirements’).
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Chapter 24
THE AUDITOR’S REPORT 2: GOING 
CONCERN
1. Going concern
If a material uncertainty exists which is adequately disclosed in the financial statements, the auditor is 
required to draw attention to the related disclosure in a separate section of the auditor's reported 
headed ‘
Material Uncertainty Related to Going Concern’.
For example:
“We draw attention to Note 6 in the financial statements, which indicates that the Company 
incurred a net loss of ZZZ during the year ended December 31, 20X1 and, as of that date, the 
Company’s current liabilities exceeded its total assets by YYY. As stated in Note 6, these events 
or conditions, along with other matters as set forth in Note 6, indicate that a material 
uncertainty exists that may cast significant doubt on the Company’s ability to continue as a 
going concern. Our opinion is not modified in respect of this matter.”
Generally if the directors or the auditors think the company might not survive into the foreseeable 
future there is a going concern problem. ‘Foreseeable future’ is not defined but under IFRS it should 
not be less than 12 months from the end of the accounting period. UK GAAP (FRS 102) specifies that is 
should not be less than 12 months from the date of approval of the financial statements.
Remember: It is for management to make an assessment of an entity’s ability to continue as a going 
concern. The auditor’s responsibilities are to obtain sufficient appropriate audit evidence, conclude 
and report.
If the notes do 
not
disclose the going concern uncertainty, the auditor must express a modified 
opinion because inadequate disclosure means that there is an element of the financial statements 
that is not 'presented fairly'. 
If there is no realistic possibility of the company surviving the financial statements should be drawn 
up on a break-up basis and, if not, the audit opinion will most likely be adverse (see Illustration in the 
last section of the next chapter).