Question
Client has breached debt covenants; lender issued waiver
valid for 9 months after balance sheet date. Auditor notes liquidity support from group company but no formal commitment. What should auditor conclude?Solution
SA 570 requires auditor to evaluate going concern for at least 12 months. Waiver for 9 months leaves uncertainty. With no formal support, a material uncertainty exists; adequate disclosure + a separate paragraph is required, not adverse/disclaimer unless disclosures inadequate.
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