Independent auditors must consider whether the entity has the ability to continue as a going concern.If a substantial doubt exists but disclosure is adequate and no other basis exists for modifying the report,the auditors would normally
A) disclaim an opinion.
B) express an adverse opinion.
C) qualify the opinion.
D) express an unmodified opinion with an emphasis-of-matter paragraph describing the going-concern uncertainty.

Question

Quizplus · Accepted Answer

The best choice in this scenario is to express an unmodified opinion with an emphasis-of-matter paragraph describing the going-concern uncertainty. This is because the auditors have determined that there is a substantial doubt about the entity's ability to continue as a going concern. However, if adequate disclosure has been made, and there is no other basis for modifying the report, the auditors would express an unmodified opinion, but highlight the going-concern uncertainty in an emphasis-of-matter paragraph. This approach provides transparency to the reader of the financial statements while also accurately reflecting the state of the entity's finances. Disclaiming an opinion or expressing an adverse opinion would be more appropriate if the auditors determine that the financial statements are materially misstated or inadequate disclosure has not been made.

Independent Auditors Must Consider Whether the Entity Has the Ability