The auditor is responsible for evaluating the likelihood of a client not being a going concern for the next 12 months. What basis will the auditor use to assess this issue?
A)Management integrity.
B)Control environment.
C)Absolute assurance.
D)Substantial doubt.

Question

Quizplus · Accepted Answer

The auditor will use the concept of "substantial doubt" to assess the likelihood of a client not being a going concern for the next 12 months. This means that the auditor will evaluate whether there is a significant risk that the client will not be able to continue its operations for the foreseeable future without potential liquidation. The auditor will consider factors such as financial performance, debt obligations, liquidity, and market conditions to make this assessment. Neither management integrity nor control environment nor absolute assurance are the basis for assessing the going concern issue.

The Auditor Is Responsible for Evaluating the Likelihood of a Client