The auditor's responsibility regarding the going concern assumption is to
A)evaluate the possibility that the company could go bankrupt
B)evaluate the appropriateness of management's use of the going concern assumption in the preparation and presentation of the financial statements
C)conclude about whether there is a material uncertainty about the company's ability to continue as a going concern
D)determine the implications for the audit report
E)estimate the net income that the company expects to earn during the current year
F)both A and B
G)both C and D
H)both D and E

Question

Quizplus · Accepted Answer

The auditor's responsibility regarding the going concern assumption is to evaluate the possibility that the company could go bankrupt (choice A) and evaluate the appropriateness of management's use of the going concern assumption in the preparation and presentation of the financial statements (choice B). Based on these evaluations, the auditor must conclude about whether there is a material uncertainty about the company's ability to continue as a going concern (choice C) and determine the implications for the audit report (choice D). Therefore, both choices C and D are correct. The auditor is not responsible for estimating the net income that the company expects to earn during the current year, so choice E is incorrect. Finally, choices A and B are part of the auditor's responsibility, but they are not the only aspects, as explained above. Therefore, choice F is incorrect.

The Auditor's Responsibility Regarding the Going Concern Assumption Is to