In the audit of a nonissuer, the auditor concludes that there is substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time. Management's plans do not alleviate this doubt. The financial statements adequately disclose the uncertainty. The auditor should issue:

Answer options:

A qualified opinion.

An adverse opinion.

An unmodified opinion with an emphasis-of-matter paragraph.

A disclaimer of opinion.

How to approach this question

Going Concern Logic: 1. Is it disclosed? Yes -> Unmodified + EOM. No -> Qualified/Adverse.

Full Answer

C.An unmodified opinion with an emphasis-of-matter paragraph.✓ Correct

If substantial doubt exists and is adequately disclosed, the financial statements are fairly presented in accordance with GAAP. Therefore, the opinion is Unmodified. However, the auditor must add a separate section (Emphasis-of-Matter) titled 'Substantial Doubt About the Entity's Ability to Continue as a Going Concern'.

Common mistakes

Thinking Going Concern issues automatically mean the numbers are wrong (Qualified/Adverse).

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