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:

Cost Of Goods Sold

The immediate expenses related to the manufacturing of products a company sells, which encompass both materials and labor.

Three Inventory Accounts

Refers to the three main types of inventory accounts on the balance sheet: raw materials, work-in-progress, and finished goods.

Direct Materials

Raw materials directly used in the manufacturing of a product, directly traceable to the finished product.

Office Supplies

Items like pens, paper, calculators, and computers that are used on a daily basis within an office setting.