If debt covenants are violated, then an auditor must:
A) issue a going concern opinion.
B) obtain evidence that the company will continue in operations.
C) be certain that this fact is disclosed in the financial statements.
D) All of the above.

Question

Quizplus · Accepted Answer

If debt covenants are violated, the auditor must make sure that this fact is disclosed in the financial statements. However, issuing a going concern opinion or obtaining evidence of the company's ability to continue operations may not necessarily be required solely based on a violation of debt covenants. The need for a going concern opinion or evidence of continued operations would depend on other factors affecting the company's financial health.

If Debt Covenants Are Violated, Then an Auditor Must