Which statement about evaluating material uncertainty or going concern is true?

• A. The auditor is required to issue a disclaimer of opinion in the event of a material uncertainty.
• B. The auditor must always issue a disclaimer for going concern problems.
• C. The auditor has no option to issue a disclaimer for uncertainty.
• D. The auditor has the option, but is not required, to issue a disclaimer of opinion for a material uncertainty or for a going concern problem.

Answer: (D)

When there’s a material uncertainty about the entity’s ability to continue as a going concern, the auditor’s report can reflect that uncertainty in several ways depending on the situation. The important idea is that the auditor has discretion about the form of the opinion; a disclaimer of opinion is not mandatory in all such cases. It may be appropriate if the auditor cannot obtain sufficient appropriate evidence or if there’s a scope limitation that prevents forming an opinion. In other circumstances, the auditor might use an emphasis-of-matter paragraph, or issue a qualified or adverse opinion, depending on how pervasive the uncertainty is and how adequately it’s disclosed in the financial statements.

So, the correct statement is that the auditor has the option, but is not required, to issue a disclaimer of opinion for a material uncertainty or for a going-concern problem. The other options are too absolute: a disclaimer isn’t required in all going-concern situations, and it isn’t mandatory in all cases of material uncertainty, while saying the auditor has no option is incorrect.