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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Auditor's reports

Delmar Group plc, a listed entity, has a going concern material uncertainty that is adequately disclosed in the notes. The auditor issues an unmodified opinion. How should the auditor deal with this matter in the auditor's report under ISA 701 and ISA 570?

The auditor reports it in a separate Material Uncertainty Related to Going Concern section, not described in the KAM section. The KAM section only refers to that section, because such matters are by nature key audit matters but are reported elsewhere.

  1. AInclude it as a key audit matter describing why it was most significant
  2. BDescribe it in the Material Uncertainty Related to Going Concern section and not in the KAM sectionCorrect
  3. COmit it from the report because it is adequately disclosed
  4. DDescribe it in an Emphasis of Matter paragraph and also as a KAM

Explanation

ISA 701 states that a matter giving rise to a modified opinion or a material uncertainty related to going concern is by its nature a key audit matter, but it is not described in the KAM section. It is reported in the dedicated going concern section, with a reference to it in the KAM section. Omitting it or duplicating it is wrong.

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