When an auditor concludes there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time,the auditor's responsibility is to ________.
A)prepare prospective financial information to verify whether management's plans can be effectively implemented
B)project future conditions and events for a period of time not to exceed one year following the date of the financial statements
C)issue a qualified or adverse opinion,depending upon materiality,due to the possible effects on the financial statements
D)consider the adequacy of disclosure about the entity's possible inability to continue as a going concern and draw attention to the issue in the audit report.

Question

Quizplus · Accepted Answer

When an auditor identifies substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time, the auditor's responsibility is to evaluate the management's plans to mitigate the situation and consider the adequacy of disclosures about the entity's possible inability to continue as a going concern. If sufficient disclosures are not made, the auditor should draw attention to the situation in the audit report. However, the auditor should not prepare prospective financial information or project future conditions and events. The audit opinion may be modified to include an explanatory paragraph, but not necessarily a qualified or adverse opinion.

When an Auditor Concludes There Is Substantial Doubt About an Entity's