If the Auditors Decide to Issue a Modified Auditor's Report

question 96

Multiple Choice

If the auditors decide to issue a modified auditor's report due to doubt about an entity's ability to continue as a going concern _______.

• A)the report should always be adverse
• B)the report should always be a disclaimer of opinion
• C)the matter should be communicated with those charged with governance
• D)the should be communicated to the client's legal counsel for disclosure to senior management

---

Definitions:

Marginal Tax Rate

The rate at which the last dollar of income is taxed.

Lump-Sum Tax Rate

A tax that is a fixed amount, no matter the change in circumstance of the taxed entity. This creates a situation where the tax burden falls more heavily on those with lower income or profit.

Marginal Tax Rate

The amount of tax applied to an additional dollar of income, often used in progressive tax systems.

Average Tax Rate

The ratio of the total amount of taxes paid to the total tax base (taxable income or spending), expressing the percentage of income that is paid in taxes.