After considering management's plans,an auditor concludes that there is substantial doubt about a client's ability to continue as a going concern for a reasonable period of time.The auditor's responsibility includes
A)Disclaiming an opinion on the financial statements due to the indications of possible financial difficulties.
B)Indicating to the client's audit committee whether management's plans for dealing with the adverse effects of the financial difficulties can be effectively implemented.
C)Considering the adequacy of disclosure about the client's possible inability to continue as a going concern.
D)Issuing a qualified or adverse opinion,depending upon materiality,due to the possible effects on the financial statements.

Question

Quizplus · Accepted Answer

The auditor's responsibility in this situation includes considering the adequacy of disclosure about the client's possible inability to continue as a going concern. This means that the auditor should review the financial statements and related notes to ensure that they include appropriate disclosures about the risks and uncertainties related to the client's ability to continue as a going concern. This disclosure is important to ensure that users of the financial statements are aware of the potential risks involved in investing in the client's business.

Additionally, the auditor may need to communicate their findings to the client's audit committee or board of directors, but this is not explicitly stated as a responsibility in the question. The auditor would not typically issue a disclaimer, qualified or adverse opinion based solely on management's plans or the possibility of financial difficulties without first considering the adequacy of disclosure.

After Considering Management's Plans,an Auditor Concludes That There Is Substantial