Which one of the following would the auditor consider to be an indication of a potential going-concern problem?
A)Loss of the controller to a competitor.
B)Improper reporting of internal controls by management.
C)Adverse key financial ratios.
D)Large increase to sales in the month previous to year-end.

Question

Quizplus · Accepted Answer

Adverse key financial ratios can indicate a potential going-concern problem as they suggest financial difficulties and the inability to meet obligations in the near future. The loss of a controller to a competitor and improper reporting of internal controls by management may indicate problems with management or the company's operations, but they do not necessarily indicate a going-concern problem. A large increase in sales in the month previous to year-end may actually be a positive sign for the company's financial health.

Which One of the Following Would the Auditor Consider to Be