ACCA Strategic Professional · Advanced Audit and Assurance (International) · Subsequent events and going concern
Auditor Mei is finalising the audit of Lumen plc, a listed entity. She concludes a material uncertainty over going concern exists and is adequately disclosed. The matter was also among those of most significance in the audit. Which statement about the auditor's report is correct under ISA 570 (Revised) and ISA 701?
The matter is reported in the separate Material Uncertainty Related to Going Concern section, not described again as a Key Audit Matter. The KAM section merely refers readers to that section, and the opinion stays unmodified because disclosure is adequate.
- AThe matter is reported only in the Key Audit Matters section, which replaces the material uncertainty section
- BThe matter is reported in the Material Uncertainty Related to Going Concern section and is not described as a Key Audit Matter, though the KAM section refers to that sectionCorrect
- CThe matter is reported in the Emphasis of Matter section, and the audit opinion is qualified
- DThe matter is reported in both sections with identical wording, because ISA 701 requires duplication
Explanation
A matter giving rise to a material uncertainty is by its nature a key audit matter, but ISA 570 requires it to be reported in the separate Material Uncertainty section and ISA 701 says it is not described in the KAM section. The KAM section instead refers to the Material Uncertainty section. The opinion remains unmodified as disclosure is adequate.
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