The auditor of Kennedy Ltd has serious doubts that the entity will continue as a going concern.There is adequate disclosure of this significant uncertainty in the notes to the financial report.The uncertainty is the result of a single factor affecting the client.What type of audit opinion should the auditor express?
A)Unmodified opinion with an Other Matter paragraph.
B)Qualified opinion.
C)Adverse opinion.
D)Unmodified opinion with a Material Uncertainty Related to Going Concern paragraph.

Question

Quizplus · Accepted Answer

The auditor should express an unmodified opinion with a Material Uncertainty Related to Going Concern paragraph. This type of opinion is appropriate when the auditor has significant doubt about the entity's ability to continue as a going concern but the disclosure in the notes adequately informs users of the financial statements about the uncertainty. This is the most appropriate opinion in this scenario as the uncertainty is the result of a single factor affecting the client. A qualified opinion or an adverse opinion would not be appropriate as the financial statements are fairly presented with no material misstatements. An Other Matter paragraph would not adequately address the significance of the uncertainty related to going concern.

The Auditor of Kennedy Ltd Has Serious Doubts That the Entity