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John Selwoods audit clinic

Attendees at the autumn 2017 roadshows have asked lots of challenging questions. John shares some you may find interesting.


In the new audit-reporting regime, I understand that when an auditor wants to emphasise a going concern issue, a Material Uncertainty paragraph needs to be added rather than an Emphasis of Matter paragraph.

I audit a number of charities where the funding is irregular and in the past I have added an Emphasis of Matter paragraph to point this out, but I do not want to say there is a material uncertainty casting significant doubt on the ability of the entity to continue as a going concern. What do I need to do in the new audit-reporting regime?


First, in the circumstances you describe and under the old regime, I don’t think you needed to add that Emphasis of Matter paragraph to your audit report. If there is no material uncertainty casting significant doubt, I would have expected that the trustees’ disclosure of the funding issues would have been sufficient and suitably prominent to ensure that the accounts showed a true and fair view without the need for you to add emphasis to it.

Going forward, I am even more convinced that the new Going Concern paragraph would be unnecessary in the circumstances that you describe. To be clear, the paragraph I am referring to is required by the revised International Standards on Auditing (ISAs) from periods commencing 17 June 2016. It is no longer referred to as an Emphasis of Matter paragraph and the new paragraph is positioned in the audit report below the Basis for Opinion paragraph, and above the Other Information paragraph.

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