Final answer:
The auditor can believe the financial statements align with GAAP while also flagging a going concern issue. These assessments are separate, and concerns about the company's viability are disclosed in the audit report.
Step-by-step explanation:
The statement that the auditor believes the financial statements are in conformity with GAAP, but there is a going concern situation can be true. An auditor's assessment about the conformity of financial statements with GAAP is separate from their consideration of the company's ability to continue as a going concern. When the auditor concludes that the financial statements are prepared in accordance with GAAP, they are saying that the accounting principles have been applied consistently and the financial data are presented fairly in all material respects. However, if there are significant doubts about the company's ability to continue as a going concern, these concerns are disclosed in the audit report, even if the financial statements themselves do not violate GAAP.
Therefore, an auditor can issue an unqualified opinion on the financial statements regarding GAAP conformity and still express a going concern uncertainty. This typically results in an unqualified opinion with a separate paragraph highlighting the going concern issue.