Skip to content

ACCA Strategic Professional · Advanced Audit and Assurance (International) · Subsequent events and going concern

During the audit of Vanta Co, the auditor identifies events that raise going concern doubts. Management refuses to make or extend its going concern assessment to cover twelve months from the date of the financial statements, despite the auditor's request. What is the most appropriate effect on the auditor's report under ISA 570 (Revised)?

The auditor should consider a qualified opinion or disclaimer because of a limitation on scope. When management will not make or extend its going concern assessment, the auditor may be unable to obtain sufficient appropriate evidence, so an unmodified report would not be justified.

  1. ANo effect, because the assessment period is a matter for management alone
  2. BConsider the implications, which may include a qualified opinion or disclaimer due to a scope limitationCorrect
  3. CIssue an adverse opinion because management has breached the framework
  4. DInclude an Emphasis of Matter paragraph only and keep an unmodified opinion

Explanation

ISA 570 states that if management is unwilling to make or extend its assessment when asked, the auditor considers the implications for the report. This may be a qualified opinion or disclaimer because of a scope limitation, as sufficient appropriate evidence may not be obtainable. An unmodified opinion with only emphasis would not address the limitation, and adverse is for misstatement rather than limitation.

Did you get it right without looking?

One question tells you little. A timed set on Subsequent events and going concern shows your real accuracy, how long you take and where you lose marks.

Practise Subsequent events and going concernFree diagnostic mock

More Subsequent events and going concern questions