An auditor concludes there is substantial doubt about an 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. What type of report should be issued?

Answer options:

Qualified opinion.

Adverse opinion.

Unmodified opinion with an Emphasis-of-Matter paragraph.

Disclaimer of opinion.

How to approach this question

Going Concern + Disclosed = Unmodified + EOM. Going Concern + Not Disclosed = Qualified/Adverse.

Full Answer

C.Unmodified opinion with an Emphasis-of-Matter paragraph.✓ Correct

If the going concern uncertainty is adequately disclosed, the auditor issues an unmodified opinion but includes a separate section (Emphasis-of-Matter) drawing attention to the note disclosure.

Common mistakes

Thinking Going Concern automatically means Qualified or Disclaimer.

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