After considering management's plans, an auditor concludes that there is substantial doubt about a client's ability to continue as a going concern for a reasonable period of time. The auditor's responsibility includes
A)disclaiming an opinion on the financial statements due to the indications of possible financial difficulties.
B)indicating to the client's audit committee whether management's plans for dealing with the adverse effects of the financial difficulties can be effectively implemented.
C)considering the adequacy of disclosure about the client's possible inability to continue as a going concern.
D)issuing a qualified or adverse opinion, depending upon materiality, due to the possible effects on the financial statements.

Question

Quizplus · Accepted Answer

When an auditor concludes that there is substantial doubt about a client's ability to continue as a going concern for a reasonable period of time, the auditor's responsibility includes considering the adequacy of disclosure about the client's possible inability to continue as a going concern. This is in line with the auditor's duty to express an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework. The auditor may also consider other audit procedures to gather more evidence about the client's ability to continue as a going concern before making a final decision on the adequacy of disclosure. However, the auditor is not responsible for implementing management's plans or issuing a qualified or adverse opinion solely based on the potential effect on the financial statements.

After Considering Management's Plans, an Auditor Concludes That There Is