Sweaty Betty Ltd is a UK company selling Sweaty Betty branded women's sportswear, which is sold in Sweaty Betty shops in different locations, through online sales, and via wholesale partners and concessions in premium department stores.

In 2020, Sweaty Betty had a strong year with turnover increasing by 53,600,000. For 2019 profit was 1,954,214, and for 2020, profit had increased to 11,033,607. The directors did not recommend paying a dividend. (Sweaty Betty Ltd 2020 Strategic Report, p. 1)

Regarding the going concern principle, the Strategic Report(p.3) mentions:

The Company is part of the Group headed by Lady of Leisure Investco Limited. The Group has prepared financial forecasts which cover the period of 12 months from the date of approval of the financial statements and consider the impact of Covid-19. These forecasts indicate that the Group and Sweaty Betty Limited will be able to meet its liabilities as they fall due throughout this period.

The financial statements were approved on 29July 2021.

An extract from BDO LLP's independent auditor report for the period ended 27 December 2020 states the following.

In our opinion, the financial statements:

• give a true and fair view of the state of the Company's affairs as at 27 December 2020 and of its profit for the year ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Company's Act 2006.

We have audited the financial statements of Sweaty Betty Limited ('the Company') for the year ended 27 December 2020 which comprise the Income statement, Statement of financial position, Statement of changes in equity and the notes to the financial statements, which includes a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard Applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. (...) We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Sweaty Betty Limited 2020 Annual Report, p.7.

Required:

• a.Is the audit opinion BDO LLP issued regarding the financial statements of Sweaty Betty Limited for the year ended 27 December 2020 an unmodified or a modified opinion? Explain your answer with reference to the abstract above.
• b.Based on the information given in the question, explain:
  • i.What does it mean for the company and for the financial statements that Sweaty Betty Limited is a considered a going concern?
  • ii.Give two reasons why BDO LLP think that Sweaty Betty Limited is a going concern?
• c.In relation to the true and fair view, explain:
  • i.On what three bases is the true and fair view assessed?
  • ii.The meaning of 'true'.
  • iii.The meaning of 'fair'.
  • iv.How 'true and fair' relates to the going concern assumption.