The Auditor of Shakey Ltd Has Serious Doubts That the Entity

question 3

Multiple Choice

The auditor of Shakey Ltd has serious doubts that the entity will continue as a going concern. There is adequate disclosure of this significant uncertainty in the notes to the financial report. The uncertainty is the result of a single
Factor affecting the client. What type of audit opinion should the auditor express?

• A) Unmodified opinion with an Other Matter paragraph.
• B) Qualified opinion.
• C) Adverse opinion.
• D) Unmodified opinion with an Emphasis of Matter paragraph.

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Definitions:

Violation-of-expectations

A method used in cognitive psychology to study the cognitive processes of infants, based on their reactions to events that defy their understanding of basic physical principles.

Object Permanence

The understanding that objects continue to exist even when they cannot be observed (seen, heard, touched, smelled, or sensed in any way).

Conservation of Volume

A cognitive ability in child development where the understanding that volume remains unchanged even when its shape changes is recognized.

Egocentrism

The inability to differentiate between oneself and other people, often characterized by a lack of empathy and an overemphasis on one's own perspective.