In which of the following circumstances would auditors most likely add an explanatory paragraph to the standard report without affecting the unqualified 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

If there is substantial doubt about the entity's ability to continue as a going concern, auditors may add an explanatory paragraph to the standard report stating that there is doubt about the entity's ability to continue as a going concern. This does not affect the unqualified opinion on the financial statements. However, this paragraph must be included for the report to be in accordance with generally accepted auditing standards (GAAS).

In Which of the Following Circumstances Would Auditors Most Likely