The auditor has serious concern about the going concern of the company. It is dependent on company's obtaining a working capital loan from a bank which has been applied for. The management of the company has made full disclosure of these facts in the notes to the balance sheet. The auditor is satisfied with the level of disclosure. He should issue___________?
Correct answer: B. unqualified opinion with reference to notes to the accounts
- A. unqualified opinion
- B. unqualified opinion with reference to notes to the accounts
- C. qualified opinion
- D. disclaimer of opinion
Explanation
A serious going-concern uncertainty that is adequately disclosed does not automatically require a qualification; the auditor refers readers to the relevant note through an emphasis or explanatory reference. The opinion itself remains unqualified.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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