Q. IF MANAGEMENT HAS NOT DISCLOSED THE FUTURE CASH INFLOW, HOW THE CAPITAL WILL ARRANGE,HOW THE LOANS WILL BE NEGOTIATED WITH LENDERS

Question

1.The Management has disclosed the facts in notes to accounts that material uncertainty exist.

2.The Management has not disclosed about how the capital will raised, future cash inflows and how the loans terms will be negotiated with lenders?

3 Auditors has disclosed the Para Material Uncertainty Exist in auditors report, but not modified his opinion

4. As per Para 2 above, is Auditor needs to qualify the Auditors report, being Net worth is eroded 100%, cash losses are there, cash flow is negative, etc as per SA 570/SA 705

Answer 1

If there are serious concerns on going concern the SA 570 applies and reporting should be done as per the Implementation guide on SA 570, which give illustrations for SA 705 and SA 706 too