If auditors determine there is substantial doubt about the entity continuing as a going concern, _______.
A)the next step is to obtain information about management's plans to mitigate or minimize the adverse effects of the situation
B)the next step is to obtain information about the auditor's plans to mitigate or minimize the adverse effects of the situation
C)they should immediately issue an adverse opinion and withdraw from the engagement
D)the auditors should immediately invoice the client for the cost of the audit and request payment within 30 days

Question

Quizplus · Accepted Answer

If auditors determine there is substantial doubt about the entity continuing as a going concern, the next step is to obtain information about management's plans to mitigate or minimize the adverse effects of the situation. The auditors should then evaluate the effectiveness of those plans and consider the implications for the financial statements. The auditors may also need to modify the audit report if the going concern issue is not adequately addressed. Issuing an adverse opinion and withdrawing from the engagement should be a last resort and only done if the going concern issue is so severe that there is no reasonable alternative. Invoicing the client and requesting payment is not a relevant step in this situation.

If Auditors Determine There Is Substantial Doubt About the Entity