You are auditing the financial statements for your new client, Paper Packaging Corporation, a manufacturer of paper containers, for the year ended 31 December 2021 Paper Packaging's previous auditors issued an audit report that included an emphasis of matter paragraph for a going-concern uncertainty on the 31 December 2020 financial statement for the following reasons: Paper packaging had defaulted on 10 million of unregistered debentures sold to three insurance companies, which were due in 2021, and the default constituted a possible violation of other debt agreements. The interest and principal payments due on the remainder of a ten-year credit agreement, which began in 2015, would exceed the cash flows generated from operations in recent years. The company had disposed of certain operating units. The proceeds from the sale were subject to possible adjustment through arbitration proceedings, the outcome of which was uncertain at year end. Various lawsuits were pending against the company. The company was in the midst of tax proceedings as a result of an examination of The Companys income tax returns for a period of 12 years. You find that the status of the above matters is as follows at year end, 31December 2021: The company is still in default on 4.6 million of the debentures due in 2021 but is trying to negotiate a settlement with remaining bondholders. A large number of bondholders have settled their claims at significantly less than par. The company has renegotiated the 2015 credit agreement, which provides for a two-year moratorium on principal payments and interest at 8 per cent. It also limits net losses for 2009 and requires a certain level of defined cumulative quarterly operating income to be maintained. The arbitration proceeding was resolved in 2021. The legal actions were settled in 2021. Most of the tax issues have been resolved, and, according to the company's external legal counsel, those remaining will result in a net cash inflow to the company. At year-end paper packaging had a cash balance of 5.5 million and expects to generate a net cash flow of 3.2 million in the upcoming fiscal year. The following information about Paper Packaging's plans for its operations in the fiscal year 2022 may also be useful in arriving at a decision.

Required: For these questions, you may wish to reference auditing standards-see ISA 570):

What should you consider in deciding whether there exists a material going-concern uncertainty?

How much influence should the report on the 31 December 2020 financial statements have on your decision?

Should your report for the year ended 31 December 2021 include an emphasis of matter paragraph for a going-concern uncertainty? Briefly explain why or what not.

At year-end paper packaging had a cash balance of 5.5 million and expects to generate a net cash flow of 3.2 million in the upcoming fiscal year. The following information about Paper Packaging's plans for its operations in the fiscal year 2022 may also be useful in arriving at a danicison