Ethical Obligations and Decision-Making in Accounting 2nd Edition by Steven Mintz, Roselyn Morris

Exercise 7

The audit report on General Motors for 2008 issued by Deloitte & Touche included the following statement: “The corporation’s recurring losses from operations, stockholders’ deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern.” Are you surprised to learn of this going concern alert at a company such as General Motors? What signs might the auditors look for prior to issuing their report on the 2009 financial statements that helps them to re-evaluate the going concern assessment?