The auditor is responsible for evaluating the likelihood of a client not going bankrupt 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 basis the auditor will use to assess the likelihood of a client not going bankrupt for the next 12 months is substantial doubt. The auditor will have to evaluate if there is substantial doubt regarding the company's ability to continue as a going concern. This evaluation considers all available information about the business, including financial statements, management representation, industry analysis, and other relevant factors. The auditor will provide an opinion on whether the financial statements are presented fairly and show a true and fair view of the company's financial position if they conclude that there is no substantial doubt. However, if the auditor concludes that there is substantial doubt about the company's ability to continue as a going concern, the auditor must report this finding in their report.

The Auditor Is Responsible for Evaluating the Likelihood of a Client