Final answer:
The appropriate audit report when there is substantial doubt about an entity's ability to continue as a going concern includes an explanatory paragraph that highlights the concern. The report reflects the auditor’s judgement about the entity’s financial situation and any disclosed plans for mitigation.
Step-by-step explanation:
When the auditor concludes that there is substantial doubt about the entity's ability to continue as a going concern, the appropriate audit report is typically one that includes an explanatory paragraph or a section that highlights the going concern uncertainty. This is often referred to as the going concern modification to the auditor’s report. The auditor’s report may include language that indicates that these conditions raise substantial doubt about the company’s ability to continue as a going concern within one year from the date the financial statements are issued. If the entity has disclosed these concerns in its financial statements and has a plan to mitigate them, the auditor will consider this in the wording of their report. It is important for the auditor to ensure that the report is clear and that it appropriately communicates the level of uncertainty regarding the entity's future.