If the auditor concludes that there may be a going-concern problem with the client,which of the following is the best course of action for the auditor to follow?
A)Issue a qualified opinion.
B)Identify and assess management's plan to overcome the situation.
C)Chart the negative trends as an addendum to the audit report.
D)Increase fees to cover the probable exposure.

Question

Quizplus · Accepted Answer

The best course of action for the auditor is to identify and assess management's plan to overcome the going-concern problem. This will provide the auditor with information to support their conclusion and identify any potential risks associated with the plan. The auditor may also consider issuing a qualified opinion or adding an explanatory paragraph to the audit report, but these actions should be based on the results of the assessment of management's plan. Charting negative trends as an addendum to the audit report may provide useful information to stakeholders, but it does not address the going-concern issue directly. Increasing fees to cover the probable exposure is not an appropriate response from the auditor.

If the Auditor Concludes That There May Be a Going-Concern