An Auditor Concludes That There Is Substantial Doubt About an Entity's

question 43

Multiple Choice

An auditor concludes that there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time. If the entity's financial statements adequately disclose its financial difficulties, the auditor's report is required to include an explanatory/emphasis-of-matter paragraph that specifically uses the phrase(s) :

• A)"reasonable period of time, not to exceed one year" and "going concern."
• B)"reasonable period of time, not to exceed one year" but not "going concern."
• C)"going concern" but not "reasonable period of time, not to exceed one year."
• D)neither "going concern" nor "reasonable period of time, not to exceed one year."

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Definitions:

Cohesion

The degree to which members of a group or team stick together, united by shared goals, mutual support, and a sense of belonging.

Efficient Communication

The process of exchanging information in a way that minimizes waste and maximizes clarity and understanding.

Effective Communication

The exchange of information in a manner where the intended message is successfully delivered, received, and understood by all parties involved.

Failure

The condition or fact of not achieving the desired end or ends, such as missing a target or not meeting a standard.