QUESTION ONE

(a) Outline the matters which are included in the basis of opinion| paragraph of an auditors report. (6 marks)

(b) Explain the audit procedures an auditor would perform when evaluating whether an entity is a going concern. (8 marks)

(c) State and briefly explain the opinion that an auditor would express in the following circumstances:

(i) There is adequate disclosure of the going concern assumption but material uncertainty exists. (2 marks)

(ii) The managements assessment of an entity continuing its operations as a going concern covers a period of less than 12 months from the balance sheet date and the management have no intention of extending it even after a request is made by the auditor. (2 marks)

(iii) In the opinion of the auditor the entity may not be able to continue its operations as a going concern. (2 marks)