After considering management's plans, if auditors determine there is substantial doubt about the entity's ability to continue as a going concern, _______.
A)the auditor should consider withdrawing from the engagement
B)the next steps are to consider the possible effects on the financial statements and on the auditor's report
C)the next steps are to consider the possible effects on the financial statements and on the internal auditor's report
D)the auditor should attempt to locate alternative lines of debt and equity capital for the client

Question

Quizplus · Accepted Answer

If auditors determine there is substantial doubt about the entity's ability to continue as a going concern, the next steps are to consider the possible effects on the financial statements and on the auditor's report. The auditor should assess management's plans to mitigate this doubt and consider whether they are feasible and realistic. The auditor should also evaluate the adequacy of disclosures related to the entity's ability to continue as a going concern in the financial statements. Depending on the assessment, the auditor may need to modify the auditor's report to include an emphasis of matter paragraph that draws attention to the going concern issue. The auditor should not consider withdrawing from the engagement or attempt to locate alternative lines of debt and equity capital for the client as these are management's responsibilities.

After Considering Management's Plans, If Auditors Determine There Is Substantial