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[answered] about:reader?url=


Using the AREA framework, answer the following question:

the following media coverage of Slater and Gordon?s financial performance and position is published and available on Blackboard (together with the FY16 Slater and Gordon Annual Report and media announcements):

the sale of debt by major lenders who advanced funds to slater and Gordon; and the Class action against Slater and Gordon by shareholders who purchased shares during the period from 30 March 2015 to 24 February 2016

  • in your opinion, do you think the audited statutory financial statements and MEDIA/ ASX Announcements adequately informed users of the underlying financial health of the business. In your response, consider:
  • The Adequacy of legal or accounting standard requirements; and
  • the?social?impact?of?corporate?collapses?and?the?role?of?financial??reporting?in?capital?markets?
  • 1.?ANALYSE

about:reader?url= #Going-concern under enhanced #audit reporting




Colin Parker While reporting of key audit matters (#KAMs) by listed entities has grabbed much recent attention,


several other new changes will affect financial statements. They are new audit-report formatting and content, considering ?other information? to be presented


with audited statements, disclosures, and the going-concern basis. The suite of enhanced standards


apply to reporting periods ending after 15 December. Going-concern considerations can be among the most challenging and judgmental aspects of


auditing. The enhanced standards: ? Give more prominence to the going-concern basis by a paragraph in the report (and in an auditor?s


description of management?s responsibilities) ? Replace ?Emphasis of Matter? with ?Material Uncertainty ? Going Concern Basis? ? Address the relationship between a material uncertainty and a key audit matter, and ? Push further disclosure considerations when events and conditions have been identified but no


material uncertainty exists (the so-called ?near miss?). There is now an explicit going-concern statement in audit reports. To refresh your memory, it is: ?As part of an audit in accordance with the Australian Auditing Standards, we exercise professional


judgement and maintain professional scepticism throughout the audit. We also: Conclude on the


appropriateness of the directors? use of the going concern basis of accounting and, based on the audit


evidence obtained, whether a material uncertainty exists related to events or conditions that may cast


significant doubt on the Company?s ability to continue as a going concern. If we conclude that a


material uncertainty exists, we are required to draw attention in our auditor?s report to the related


disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our


conclusions are based on the audit evidence obtained up to the date of our auditor?s report. However, 1 of 3 12/12/2016 8:29 pm about:reader?url= future events or conditions may cause the Company to cease to continue as a going concern.? This statement and related changes to ASA 570 Going Concern require an auditor to have a thoughtful


approach to the risk associated with using the going-concern basis generally and, in particular, where


there is a related material uncertainty. In the latter case, an ?Emphasis of Matter? paragraph no longer applies. Instead, there is a new


paragraph headed ?Material Uncertainty Related to Going Concern?, which in part states: ?As stated in


Note X, these events or conditions, along with other matters as set forth in Note X, indicate that a


material uncertainty exists that may cast significant doubt on the Company?s ability to continue as a


going concern. Our opinion is not modified in respect of this matter?. Audit reports reference relevant note(s) in financial statements (general-purpose or special-purpose)


that need to comply with relevant accounting standards. In general-purpose statements, appropriate


disclosure of a material uncertainty requires various considerations to tell the going-concern story. They include such matters as: ? The disclosure of material uncertainties (AASB 101 Presentation of Financial Statements) ? The concept of fair presentation, the judgements made in applying accounting policies, and capital


management (AASB 101) ? Liquidity risk disclosure (AASB 7 Financial Instruments: Disclosure), and ? Subsequent events (AASB 110 Subsequent Events). The auditor needs to be satisfied that appropriate disclosures are made, otherwise a modified opinion


will need to be issued concerning inadequate disclosure. An auditor must consider whether there is adequate disclosure of the following: ? The principal events or conditions that might cast significant doubt on the entity?s ability to


continue as a going concern ? Management?s plans to deal with these events or conditions, and ? That there is a material uncertainty related to events or conditions that might cast significant 2 of 3 12/12/2016 8:29 pm about:reader?url= doubt on the entity?s ability to continue as a going concern and, therefore, that it might be unable to


realise its assets and discharge its liabilities in the normal course of business. ASA 570 now addresses what is becoming known as a ?near miss?: ?If events or conditions have been


identified that may cast significant doubt on the entity?s ability to continue as a going concern but,


based on the audit evidence obtained the auditor concludes that no material uncertainty exists, the


auditor must evaluate whether, in view of the requirements of the applicable financial reporting


framework, the financial report provides adequate disclosures about these events or conditions?. The ?near miss? rule should result in the auditor?s prompting the preparer to revisit the adequacy of


disclosures around going concern. Near-miss disclosures revert back to the reporting framework being


applied. Perplexingly, a ?near miss? can give to a key audit matter, but a material uncertainty related to going


concern does not. The key-audit-matter section contains only a cross-reference to the materialuncertainty paragraph. Preparers need to take a good look at what the new audit reporting says about your responsibilities


regarding going concern. Its application can be difficult. Preparers and auditors needs to be on top of their game, particularly


where there are near misses or material uncertainties. Colin Parker is principal GAAP Consulting and team advisory and #litigation services. He is a former


member of the #AASB and editor of GAAP Alert ( Colin and Sonya Sinclair


reviewed the going concern requirements in the December 8 #GAAPinar No.10 Enhanced Audit


Reporting Standards ? 31 December year ends. Recording are available. ? GAAP Consulting 2016 3 of 3 12/12/2016 8:29 pm


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