Page 199 - CA Final PARAM Digital Book.

are several factors leading to a material uncertainty that board members in an accident)
may cast a significant doubt about the Company’s
ability to continue as a going concern: or
➢ Early application (where permitted) of a new Accounting (E.g. New Ind AS not yet
standard that has a material effect on the financial mandatory but permits early
statements. application, entity is permitted, but
not required, to apply that Ind AS
in its first Ind AS FST.)
➢ A Material uncertainty regarding the outcome of a (E.g. - Case Verdict - Johnson baby
litigation wherein an unfavourable decision could result power causes cancer)
in a significant outflow of resources for the company,
etc.
➢ An uncertainty relating to the future outcome of (E.g. - new law may be passed
Exceptional litigation or regulatory action. against environmental pollution
and would impose retrospective
penalties on company)
➢ A significant Subsequent event that occurs between the (E.g. debtor whose financial
date of the financial statements and the date of the condition was not good on the date
auditor’s report. financial statements went

bankrupt before the date of the
auditor’s report )
Author’s Note
C-GAMES to understand Examples of Emphasis of Matters which may have an Adverse Effect

Examples of Emphasis of Matters which may not affect the Functioning of the Company are:

➢ When a financial reporting framework prescribed by law (E.g. FST of Space organisation
or regulation would be unacceptable but for the fact that does not contains detailed notes as
it is prescribed by law or regulation government law to protect
confidentiality)
➢ To alert users that the financial statements are prepared (E.g.T.R.A.I asked for circle wise P&L
in accordance with a special purpose framework. which is only suitable for decision
making of license fees)
➢ When facts become known to the auditor after the date (E.g. Revision of Audit report after
of the auditor’s report and the auditor provides a new or BOD revised financial statement to
amended auditor’s report (i.e., subsequent events). include upward revaluation of
Fixed asset)

➢ On managerial remuneration which is subject to the
approval of the Central Government;

➢ relating to accrual of a contractually receivable claim
based on management estimate where the ultimate
realisation could be different from the amount accrued (E.g. – Deferred tax Asset)

➢ on frauds that have been dealt with in the financial (E.g. – Fraud which was undetected
statements of the company and would not have any by auditor but got recorded in the
accounting effect on the financial statements. financial statement, inventory was
stolen by employee and were also
not included in stock taking)

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