Management will often resist a going-concern modification because investors,lenders,and customers may lose faith in the business.

Question

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This statement is true. When a going-concern modification is issued by an auditor, it suggests that the business may not be able to continue operating for the foreseeable future. This can cause concern among investors, lenders, and customers who may perceive the business as being at risk of failure. As a result, management may resist a going-concern modification in order to maintain confidence in the business.

Management Will Often Resist a Going-Concern Modification Because Investors,lenders,and Customers