Waveland South, a private company, is a new audit client for 2025. Waveland’s financial statements for 2024 were audited by the previous auditor. The previous auditor’s report was an unmodified opinion with a Going Concern section. The issue identified by the previous auditor was that a material amount of debt, which Waveland could not pay, was coming due in the next year. Waveland was in negotiations with Gulf State Bank, but the bank was not willing to modify or extend the existing financing. Waveland took no other action to secure financing from other lenders. In the 2024 financial statements, Waveland did not disclose any information about the debt situation. 

Required

Debate whether the opinion in the previous year’s audit report was appropriate. If you disagree with the type of report issued by the previous auditors, what type of report do you think should have been issued, and why?