When an Auditor Concludes There Is Substantial Doubt About an Entity's

question 56

Multiple Choice

When an auditor concludes there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time, the auditor's responsibility is to:

• A)prepare prospective financial information to verify whether management's plans can be effectively implemented.
• B)project future conditions and events for a period of time not to exceed one year following the date of the financial statements.
• C)issue a qualified or adverse opinion, depending upon materiality, because of the possible effects on the financial statements.
• D)consider the adequacy of disclosure about the entity's possible inability to continue as a going concern.

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Definitions:

Metabolic Disorder

A genetic or acquired disorder that affects the body's ability to convert food into energy, often leading to an excessive buildup of toxic substances.

Intellectual Disability

An affliction signified by severe limitations in cognitive functioning and in adaptive behavior, affecting numerous fundamental social and practical life skills.

Phenylketonuria (PKU)

A genetic disorder resulting from an inability to metabolize the amino acid phenylalanine, leading to harmful levels in the body if untreated.

Encopresis

A condition characterized by the repeated passing of feces into inappropriate places by a child who is typically over the age of four.