In which of the following circumstances would auditors most likely add an emphasis-of-matter paragraph or additional section to the standard (unmodified) report without modifying the opinion on the entity's financial statements?
A)The auditors are asked to report on the balance sheet, but not on the other basic financial statements.
B)There is substantial doubt about the entity's ability to continue as a going concern.
C)Management's estimates of the effects of future events on the entity's financial condition, results of operations, and cash flows are unreasonable.
D)Certain transactions cannot be tested because of management's records retention policy.

Question

Quizplus · Accepted Answer

In the case where there is substantial doubt about the entity's ability to continue as a going concern, auditors may add an emphasis-of-matter paragraph or an additional section to the standard (unmodified) report to emphasize this uncertainty to users of the financial statements. This additional paragraph or section would not modify the opinion on the financial statements but would draw attention to the significant issue of the entity's ability to continue its operations. The other options (A, C, and D) would most likely result in a modification to the opinion or a disclaimer of opinion.

In Which of the Following Circumstances Would Auditors Most Likely