29. An auditor concludes that there is substantial doubt about a client\'s abili

Question

29. An auditor concludes that there is substantial doubt about a client's ability to continue as a going concern. If the client's financial statements adequately disclose its financial difficulties, which one of the following opinions should the auditor issue? (Hint: think carefully about the fact that the client's financial statements adequately disclose its financial difficulties). a. The auditor should issue a disclaimer opinion. b. The auditor should issue a qualified opinion. c. The auditor should issue an unqualified opinion. The auditor should issue a qualified opinion and add an explanatory paragraph detailing the issues relating to the going concern judgment. d.

Explanation / Answer

Answer: c. The auditor should issue an unqualified opinion.

Explanation: When auditor obtains sufficient and appropriate audit evidence to draw the conclusion that the financial statements present a true and fair view, he should issue a unqualified audit report.

In the given case, the auditor concluded that there is substantial doubt about client's ability to continue as a going concern, which is adequately disclosed in the financial statements.

So, he should issue an unqualified opinion

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