Question1.11 Which of the following statements, relating to the auditor’s reporting responsibilities for going concern, if any, is/are correct?(i) Where the auditor believes that there is adequate disclosure of a material uncertainty with regard to the going concern basis, the auditor should include a separate section under the heading “material uncertainty related to going concern” in the audit report. (ii) Where the use of the going concern assumption is inappropriate, the auditor should include a qualified opinion in the audit report. (i) only. Neither (i) nor (ii). (ii) only. Both (i) and (ii). ResetMaximum marks: 1 Flag question undefined单项选择题
A
(i) only.
B
Neither (i) nor (ii).
C
(ii) only.
D
Both (i) and (ii).

Question

Question1.11 Which of the following statements, relating to the auditor’s reporting responsibilities for going concern, if any, is/are correct?(i) Where the auditor believes that there is adequate disclosure of a material uncertainty with regard to the going concern basis, the auditor should include a separate section under the heading “material uncertainty related to going concern” in the audit report. (ii) Where the use of the going concern assumption is inappropriate, the auditor should include a qualified opinion in the audit report. (i) only. Neither (i) nor (ii). (ii) only. Both (i) and (ii). ResetMaximum marks: 1 Flag question undefined单项选择题

A

(i) only.

B

Neither (i) nor (ii).

C

(ii) only.

D

Both (i) and (ii).

BlackTom AI · Accepted Answer

Under ISA 570 (or equivalent national standards), when management discloses a material uncertainty related to going concern adequately, the auditor draws attention to that matter by including an Emphasis of Matter paragraph titled “Material Uncertainty Related to Going Concern” and issues an unmodified opinion. This addresses statement (i) — it is correct.

Step-by-step reasoning:
1. Relevant concepts: “going concern” assesses whether an entity will continue operations for the foreseeable future; a “material uncertainty” is a significant doubt about that ability; auditor reporting options include unmodified (possibly with Emphasis of Matter), qualified, adverse, or disclaimer of opinion depending on adequacy of disclosure and materiality/pervasiveness of misstatement or limitation.
2. Application to (i): If the auditor concludes there is a material uncertainty but management’s disclosures are adequate, ISA 570 requires the auditor to include a separate section drawing attention to it (commonly headed “Material Uncertainty Related to Going Concern”) while still issuing an unmodified opinion. Thus (i) is supported by the standard.
3. Application to (ii): If the use of the going concern basis is inappropriate (i.e., financial statements are prepared on an inappropriate basis or disclosures are inadequate), this constitutes a disagreement or misstatement. The correct auditor response depends on magnitude/pervasiveness: a material but not pervasive misstatement leads to a qualified opinion; a material and pervasive misstatement leads to an adverse opinion. Therefore the blanket statement that the auditor “should include a qualified opinion” is incomplete and potentially incorrect.

Why the correct answer is (i) only:
- (i) precisely matches the standard reporting requirement for an adequately disclosed material uncertainty.
- (ii) is incorrect because the appropriate modification may be qualified or adverse depending on pervasiveness; it is not always qualified.

Thus the correct choice is (i) only. This matches the provided answer.

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