What Course of Action Should Auditors Take If,after Evaluating Management's

question 23

Multiple Choice

What course of action should auditors take if,after evaluating management's plan to mitigate the effect of factors that suggest going-concern uncertainties,they believe that substantial doubt about going-concern status does not exist?

• A) Modify their report on the financial statements to describe management's plan to mitigate going-concern uncertainties, identify the procedures performed by the auditors, and indicate that substantial doubt about going concern does not exist.
• B) Prepare a separate report that describes management's plan to mitigate going-concern uncertainties, identify the procedures performed by the auditors, and indicate that substantial doubt about going concern does not exist.
• C) Require financial statement disclosure of management's plan to mitigate going-concern uncertainties with no modification to the auditors' report on the financial statements or no separate report on going concern.
• D) Conclude that substantial doubt about going-concern status does not exist and not require financial statement disclosure or modification of the auditors' report.

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Definitions:

Z-Value

A statistic that measures the number of standard deviations a data point is from the mean of a distribution, often used in standard score calculations.

Population Proportion

A measure that represents the fraction or percentage of members in a population that exhibit a certain attribute or characteristic.

Margin of Error

An expression of the amount of random sampling error in a survey's results, indicating the range within which the true population parameter is likely to lie.

Mean Number

Typically refers to the average value of a set of numbers, calculated by dividing the sum of all numbers by the count.