Analyse and explain how the following situation would affect the audit report for the financial year ended on 31 December 2020.

The client company, Iron Ore Ltd, has reported $6 million mining-related assets in the financial statement at a Toowoomba site. However, additional funding is required to successfully commercialise the site. At this stage, its uncertain that the client is able to obtain this additional funding.

The auditors believe the information is adequately disclosed by the client in the footnote of the financial report. The carrying value of the mining-related assets represents 6.7% of reported net profit for the 2020 financial year, whereas the clients materiality is 5% of reported net profit