As the Auditor Was Enagaged to Undertake the Audit After

question 45

Multiple Choice

As the auditor was enagaged to undertake the audit after the year- end, and he was unable to physically examine inventory, the auditor has not accumulated sufficient appropriate evidence to determine whether the financial report is presented fairly. The auditor must depart from the unmodified audit report because:

• A) the scope of the audit has been restricted by circumstances beyond either the client's or auditor's control.
• B) the auditor has lost independence.
• C) the financial report has not been prepared in accordance with accounting standards.
• D) the scope of the audit has been limited.

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Definitions:

Banks

Financial institutions licensed to receive deposits and make loans. They also offer various other financial services such as wealth management, currency exchange, and safe deposit boxes.

Thrifts

Financial institutions that primarily accept savings deposits and make mortgage loans, including savings and loan associations, savings banks, and credit unions.

Market Risk

The risk of losses in investments due to factors that affect the overall performance of the financial markets, such as economic changes or natural disasters.

Purchasing Power Risk

The risk that the value of money will decrease over time due to inflation, affecting the real value of investments and savings.