Surfer Dudes Case Summary

Surfer Dudes Duds Case

During the Surfer Dudes case the going concern assumption and opinion an auditor might issue at the end of an audit are a focal point. It is brought up in relation to the audit of the Surfer dudes company. Whether or not to issue a going concern opinion is a tough decision and can have a serious effect on a company. Taking into account the relationship between the audit partner and CEO in this case the issue becomes even touchier. Going concern is an assumption that a particular company will be financially stable enough to continue and fulfill its obligations in the present and future. When an auditor issues a going concern opinion it is because this assumption is not met. An unqualified opinion is issued when all financial statements are thought to be free of material errors. Technically a company could have financial statements free from material errors and deserving of an unqualified opinion but
One of these would be possible litigation from lenders and creditors who relied on their audit opinion. Another might be litigation from Surfer Dudes themselves claiming the audit firm didn’t inform them about their going concern and therefore didn’t allow for them to make necessary changes. Another alternative is that Surfer Dudes might turn the company around and no one will be affected by the absence of a going concern explanatory paragraph. Taking into account everything concerning the Surfer Dudes case Mark should try to come up with a strong argument to convince George issuing a going concern opinion is the right thing to do. He should explain how this would allow George to sit down with the audit firm and discuss plans to turn things around; as well as giving customers, and creditor’s faith that Surfer Dudes is reliable in disclosing important