A going concern issue requires an explanatory paragraph to be added to the standard unqualified audit report (public company).

Question

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A going concern issue represents a significant uncertainty that may affect the company's ability to continue operating as a going concern (i.e., for at least the next twelve months from the report date). Therefore, the auditor must assess the company's ability to continue as a going concern and may need to modify the audit report by adding an explanatory paragraph to inform users of the financial statements about the going concern issue. The paragraph should describe the nature of the issue, management's plan to address it, and the auditor's opinion on whether the financial statements are fairly presented despite the going concern uncertainty. Such a report is known as a "qualified opinion with a going concern explanatory paragraph."

A Going Concern Issue Requires an Explanatory Paragraph to Be