Under Canadian Audit Standard CAS 706,the Auditor May Decide to Place

question 47

Essay

Under Canadian audit standard CAS 706,the auditor may decide to place a "red flag" paragraph drawing attention to the uncertainty in the report.If there is material uncertainty about the going-concern assumption,for example,then CAS 706 requires that an emphasis of matter paragraph be added even when there is proper disclosure in the financial statements.Under what circumstances would uncertainty situations cause audit reports to be qualified for departures from GAAP?

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Definitions:

Slope

Slope is the measure of the steepness or incline of a line, calculated as the ratio of the vertical change to the horizontal change between two points on the line.

Economic Growth

A rise in the output of goods and services within an economy across a specified timeframe, generally gauged by Gross Domestic Product (GDP).

Production Possibilities

A curve or frontier that shows the various combinations of different goods that an economy can produce, given its technology and resources.

Absolute Value

The distance of a number from zero on the number line, disregarding any sign it might have, making it always a non-negative value.