When an auditor concludes there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time, the auditor's responsibility is to ________.
A) prepare prospective financial information to verify whether management's plans can be effectively implemented
B) project future conditions and events for a period of time not to exceed one year following the date of the financial statements
C) issue a qualified or adverse opinion, depending upon materiality, due to the possible effects on the financial statements
D) consider the adequacy of disclosure about the entity's possible inability to continue as a going concern

Question

Quizplus · Accepted Answer

When an auditor concludes there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time, the auditor's responsibility is to consider the adequacy of disclosure about the entity's possible inability to continue as a going concern. The auditor should evaluate management's plans for dealing with the going concern issue and ensure that the financial statements include appropriate disclosures about the entity's financial condition and possible future uncertainties. While the auditor may also prepare prospective financial information or project future conditions and events, this is not the primary responsibility when there is doubt about an entity's ability to continue as a going concern. An adverse or qualified opinion may be issued if the financial statements do not include adequate disclosures.

When an Auditor Concludes There Is Substantial Doubt About an Entity's