In which of the following situations would an auditor ordinarily choose between
ID: 2483224 • Letter: I
Question
In which of the following situations would an auditor ordinarily choose between expressing a qualified opinion or an adverse opinion?
a. The auditor did not observe the entity’s physical inventory and is unable to become satisfied as to its balance by other auditing procedures.
b. The financial statements fail to disclose information that is required by generally accepted accounting principles.
c. The auditor is asked to report only on the entity’s balance sheet and not on the other basic financial statements.
d. Events disclosed in the financial statements cause the auditor to have substantial doubt about the entity’s ability to continue as a going concern.
please explain the answer
Explanation / Answer
d. Events disclosed in the financial statements cause the auditor to have substantial doubt about the entity’s ability to continue as a going concern because inadequate disclosure of the substantial doubt about the entity's ability to continue as a going concern is a departure from GAAP , resulting in either a qualified opinion or an adverse opinion