If Auditors Determine There Is Substantial Doubt About the Entity

question 58

Multiple Choice

If auditors determine there is substantial doubt about the entity continuing as a going concern, _______.

• A)the next step is to obtain information about management's plans to mitigate or minimize the adverse effects of the situation
• B)the next step is to obtain information about the auditor's plans to mitigate or minimize the adverse effects of the situation
• C)they should immediately issue an adverse opinion and withdraw from the engagement
• D)the auditors should immediately invoice the client for the cost of the audit and request payment within 30 days

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Definitions:

Reconstruction

The process of rebuilding or reforming an aspect of something, especially following damage or destruction.

Bartlett

Refers to Frederic Bartlett, a British psychologist known for his work on memory and cognitive psychology, emphasizing how people reconstruct the past.

Loftus

A cognitive psychologist known for her work on the malleability of human memory and the misinformation effect.

Misinformation Effect

The phenomenon in which a person's recall of episodic memories becomes less accurate due to post-event information.