One modification to an
auditor's report is very serious - when the CPA firm says that it has
substantial doubts about the capability of the business to continue as a going
concern. Unless there is evidence to the contrary, the CPA auditor assumes that
the business is a going concern. If an auditor has serious concerns about
whether the business is a going concern, these doubts are spelled out in the
auditor's report.
Most audit reports on financial statements give the business a clean bill of health, or a clean opinion. The threat of an adverse opinion almost always motivates a business to give way to the auditor and change its accounting or disclosure in order to avoid getting the kiss of death of an adverse opinion. The SEC does not tolerate adverse opinions by auditors of public businesses; it would suspend trading in a company's stock share if the company received an adverse opinion from its CPA auditor.
Most audit reports on financial statements give the business a clean bill of health, or a clean opinion. The threat of an adverse opinion almost always motivates a business to give way to the auditor and change its accounting or disclosure in order to avoid getting the kiss of death of an adverse opinion. The SEC does not tolerate adverse opinions by auditors of public businesses; it would suspend trading in a company's stock share if the company received an adverse opinion from its CPA auditor.
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