cial statements, there is a Should management incorrectly handle going concern-related matters in the distinct risk that a contravention of section 29(2) of the Companies Act will arise. This section prohibits financial statements from being false, incomplete or misleading in any material respect, and directors who are party thereto will be guilty of a criminal offence. Therefore, if a company's management inappropriately presents the provides inadequate disclosure with regard to a material uncertainty relating to going concern, this may lead to a financial statements using the going concern basis of accounting when the company is not a going concern, or section 3.5 of Chapter 3) and, once this is reported to the IRBA as such, the auditor has to highlight this fact in the contravention of the Companies Act. This contravention is likely to give rise to a Reportable Irregularity (refer to auditor's report under the section 'Report on Other Legal and Regulatory Requirements! Assessment questions For questions 1 to 20, state whether the statement is true or false: 1. Subsequent events are defined as events occurring between the date of the financial statements and the date of the auditor's report. (LO 17) 2. Adjusting subsequent events require only disclosure in the form of a note to the financial statements. (LO 18) The auditor has an obligation to obtain sufficient appropriate audit evidence with regard to subsequent events to ensure that they are properly accounted for by management in terms of IAS 10. (LO 19 & 20) 3. 4. Obtaining an attorney's confirmation letter providing information about litigation against the entity is one of the types of audit procedures the auditor will perform in identifying subsequent events. (LO 21) 5. 6. 8. 7. If the intention of placing the company in business rescue proceedings is only to award a better return to the shareholders and creditors and not to rehabilitate the company to be a going concern, the auditor will express an unmodified audit opinion with an Emphasis of Matter paragraph if the financial statements are prepared on a liquidation basis. (LO 33) 9. Business rescue proceedings are undertaken exclusively to rehabilitate the company to be able to continue as a going concern. (LO 30 & 31) Once a company is placed in business rescue proceedings, it will be an indication to the auditor that the financial statements hould be prepared on the liquidation basis. (LO 32) 676 Factual insolvency exists when an entity is not able to pay its debts in the normal course of business. (LO 27) The auditor will only assess the going concern ability of the entity if management or those charged with governance requests the auditor to do so. (LO 23) 10. If final materiality is different from performance materiality, the auditor will use performance materialit in assessing the misstatements identified during the audit. (LO 3 & 5) Auditing Fundamentals in a South African Con

Should management incorrectly handle going concern-related matters in statements from being false, incomplete or misleading in any material respect, and directors who ate poln thereto will be guilty of a criminal offence. Therefore, if a company's management inappropriately provetes the financial statements using the going concem basis of accounting when the company is not a goingronctem, fe contravention of the Companies Act. This contravention is likely to give rise to a Reportable inichularity (refert of section 3.5 of Chapter 3) and, once this is reported to the IRBA as such, the auditor has to highighi this fact (nithy auditor's report under the section 'Report on Other Legal and Regulatory Requirements' Assessment questions For questions 1 to 20 , state whether the statement is true or false: 1. Subsequent events are defined as events occurring between the date of the financial statements and the date of the auditor's report. (LO 17) 2. Adjusting subsequent events require only disclosure in the form of a note to the financial statements ( 10 is) 3. The auditor has an obligation to obtain sufficient appropriate audit evidence with regard to subsequent events to ensure that they are properly accounted for by management in terms of TAS 10. (LO 19&20) 4. Obtaining an attorney's confirmation letter providing information about litigation against the entity is one of the types of sudit procedures the auditor will perform in identifying subsequent events. (L.O21) 5. Business rescue proceedings are undertaken exclusively to rehabilitate the company to be able to continue as a going concern. (LO 30&31 ) 6. Once a company is placed in business rescue proceedings, it will be an indication to the auditor that the financial statements should be prepared on the liquidation basis. (L. 32) 7. If the intention of placing the company in business rescue proceedings is only to award a better return to the shareholders and creditors and not to rehabititate the company to be a going concern, the auditor will express an unmodified audit opinion with an Emphasis of Matter paragraph if the financial statements ar prepared on a liquidation basis. ( 1.033 ) 8. Facrual insolvency exists when an entiry is not able to pay its debts in the normal course of business. (LO27) 9. The auditor will only assess the going concern ability of the entity if management or those charged with governance requests the auditor to do sa. (LO 23) 10. If final materiality is different from performance materiality, the auditor will use periormance materialit in assessing the misstatements identified during the audit. (LO 3& \& )