Auditor’s Considerations in Providing an Opinion and Paragraph on Material Uncertainty on Going Concern Based on SA 570: Case Study of PT ABC

Abstract

This study analyzes the auditor’s considerations in assessing going-concern uncertainty and determining the inclusion of a material uncertainty paragraph in the Independent Auditor’s Report in accordance with SA 570 (Revised 2021). Using a qualitative case study approach, the research examines PT ABC, a technology-based start-up established in late 2024, which has not commenced commercial operations and exhibits early-stage characteristics such as operating losses, negative operating cash flows, and dependence on external funding. Data were obtained from the company’s audited financial statements and the auditor’s report for 2024. The analysis was conducted through the identification of going-concern indicators, evaluation of management’s plans, and assessment of the auditor’s professional judgment. The results show that although PT ABC presents several indicators of financial uncertainty, the auditor concluded that these conditions are consistent with the development stage of a start-up company. Management’s plans, including funding support from shareholders and initial business strategies, were assessed as adequate and feasible to mitigate short-term uncertainties. Therefore, the auditor determined that the going-concern basis of accounting remained appropriate and issued an unmodified opinion accompanied by a separate paragraph disclosing material uncertainty. This study highlights the application of SA 570 in start-up entities and reinforces the importance of contextual analysis and auditor judgment when evaluating business continuity.