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Where an auditor's judgment and opinion can have a significa

Where an auditor's judgment and opinion can have a significant impact on the stakeholders' perception is when issues of going concern arise. Issues of going concern arise when the auditor determines that, due to certain circumstances, "the client may not be able to continue its operations or meet its obligations for a reasonable period." (Arens, et al., 2006, p. 52)

Auditors often hesitate to make statements regarding going concern because they often turn into "self-fulfilling prophecies." In other words, the auditor says they have reason to worry the company will fail, therefore investors pull out and the company fails. The fear is that the auditor caused the failure by stating their concerns.

What are some situations where an auditor might need to include a statement regarding going concern? What type of opinion would be issued if there was such an issue? Do you think that, with the current economy, we should be seeing more auditors express worries about going concern?

Reference: Arens, A. A., Elder, R. J., & Beasley, M. S. (2006). Auditing and assurance services: An integrated approach (11th ed.). New York, NY: Pearson.

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Where an auditor's judgment and opinion can have a significant impact on the stakeholders' perception is when issues of going concern arise. Issues of going concern arise when the auditor determines that, due to certain circumstances, "the client may not be able to continue its operations or meet its obligations for a reasonable period." (Arens, et al., 2006, p. 52)

Auditors often hesitate to make statements regarding going concern because they often turn into "self-fulfilling prophecies." In other words, the auditor says they have reason to worry the company will fail, therefore investors pull out and the company fails. The fear is that the auditor caused the failure by stating their concerns.

What are some situations where an auditor might need to include a ...

Solution Summary

The solution discusses the auditor's judgment and opinion can have a significant impact on the stakeholder's perception is when issues of going concern arise.

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