Question

Which one of the following is an instance where the auditor would add a paragraph after the opinion paragraph?

a. There is serious doubt that the client can continue as a going concern.
b. Management's disclosures are not adequate.
c. There are significant uncertainties that are not properly disclosed in the footnotes.
d. There is a material dollar misstatement in the financial statements.

Answer 1

The auditor would add a paragraph after the opinion paragraph in the case where there is serious doubt that the client can continue as a going concern.

Step-by-step explanation:

The correct answer is a. There is serious doubt that the client can continue as a going concern. When there is doubt about a company's ability to continue operating, the auditor adds a paragraph after the opinion paragraph to express their concern. This paragraph is called an emphasis of matter paragraph and is included to alert the reader to the significant issue affecting the company's financial statements.