An auditor has concluded that substantial doubt exists and that the client will not be able to meet its obligations as they become due for a reasonable period of time. Financial statement and footnote disclosures are adequate, detailing the conditions, events, and management's plans to alleviate the doubt. However, the CPA believes that substantial doubt remains. The CPA must add a Going Concern section to the audit report, discussing the Substantial Doubt. How should the audit opinion be modified?

a.No modification.

b.A qualified opinion.

c.An adverse opinion.

d.A disclaimer of opinion.

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Question 17

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Substantial doubt exists regarding a client's ability to continue. The client must present its plans to mitigate the effects of the events and conditions. Which item is NOT an acceptable plan?

a.Restructure debt to delay due date of Bonds Payable.

b.Sell assets used in product production for cash.

c.Issue Common Stock at market value.

d.Decrease dividend requirements.

e.Obtain cash by issuing notes.

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Question 18

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A group auditor decides not to take responsibility for the component auditor's audit of a subsidiary. The effect on the audit report is

a.An additional paragraph to disclaim an opinion on the group auditor's audit.

b.An additional paragraph qualifying an opinion on the group auditor's audit.

c.A detail, in terms of dollars and percentages, of the group auditor's work in the Opinion section of the audit report.

d.A detail, in terms of dollars and percentages, of the group auditor's work in the Basis for Opinion section of the audit report.