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Unformatted text preview: to the financial statements is warranted. The explanatory paragraph should describe specific reasons causing uncertainties about the companys ability to continue as a going concern. j. Due to substantial difficulty in estimating its uncollectible accounts and given the relatively small amount of receivables on your clients financial statements, you concur with their use of the direct write-off method for accounting for bad debt. j. An approved departure from GAAP calls for an unqualified report with an explanatory paragraph that discusses the inherent difficulties of the estimate, the auditor's concurrence with the departure and the effect of the departure on the appropriate accounts. Note that in this case, an estimate of the effect of the departure is not, by definition, possible. Also note that this situation is extremely rare....
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- Fall '08