An auditor concludes that there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time. If the entity's financial statements adequately disclose its financial difficulties, the auditor's report is required to include an explanatory/emphasis-of-matter paragraph that specifically uses the phrase(s):
A)"reasonable period of time, not to exceed one year" and "going concern."
B)"reasonable period of time, not to exceed one year" but not "going concern."
C)"going concern" but not "reasonable period of time, not to exceed one year."
D)neither "going concern" nor "reasonable period of time, not to exceed one year."

Question

Quizplus · Accepted Answer

The auditor's report should include an explanatory or emphasis-of-matter paragraph that uses the phrase "going concern" to highlight the substantial doubt about the entity's ability to continue as a going concern. The specific time frame of "reasonable period of time, not to exceed one year" is typically considered in the assessment but is not required to be explicitly mentioned in the auditor's report.

An Auditor Concludes That There Is Substantial Doubt About an Entity's