ExpertMedium1 markMultiple Choice
CPA · Question 61 · Area 4: Reporting
An auditor concludes there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time. Management's plans do not alleviate this doubt. The financial statements adequately disclose the uncertainty. What type of report should be issued?
An auditor concludes there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time. Management's plans do not alleviate this doubt. The financial statements adequately disclose the uncertainty. What type of report should be issued?
Answer options:
A.
Qualified opinion.
B.
Adverse opinion.
C.
Unmodified opinion with an Emphasis-of-Matter paragraph.
D.
Disclaimer of opinion.
How to approach this question
Going Concern + Disclosed = Unmodified + EOM. Going Concern + Not Disclosed = Qualified/Adverse.
Full Answer
C.Unmodified opinion with an Emphasis-of-Matter paragraph.✓ Correct
Unmodified opinion with an Emphasis-of-Matter paragraph.
If the going concern uncertainty is adequately disclosed, the auditor issues an unmodified opinion but includes a separate section (Emphasis-of-Matter) drawing attention to the note disclosure.
Common mistakes
Thinking Going Concern automatically means Qualified or Disclaimer.
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