What is the form of audit opinion you would give if you concluded that the client company was experiencing going concern problems and: i. you have established...

      

What is the form of audit opinion you would give if you concluded that the client company was experiencing going concern problems and:
i. you have established that the financial statements give sufficient disclosure of the going concern problems?
ii. you have established that there is no disclosure of the going concern problems in the financial statements?

  

Answers


Wilfred
(i) If adequate disclosure is made in the financial statements, the auditor should ordinarily express an unqualified opinion and modify the auditor‘s report by adding an emphasis of matter paragraph that highlights the going concern problem by drawing attention to the note in the financial statements that discloses the matter set out in such a paragraph. The purpose of the emphasis of matters paragraph is to draw the attention of the user of the financial statement to the note in the financial statements that discusses the going concern issue for a better understanding.

(ii) If adequate disclosure is not made in the financial statements, the auditor should express a qualified or adverse opinion, as appropriate. This is because the financial statements will be misleading and the auditor needs to highlight this by either qualifying the report of by issuing an adverse opinion
Wilfykil answered the question on February 21, 2019 at 13:23


Next: Explain five factors which would indicate to the auditor that the going concern assumption of the business entity he is auditing is threatened
Previous: What is embryo transplant?

View More CPA Auditing and Assurance Questions and Answers | Return to Questions Index


Exams With Marking Schemes

Related Questions