If It Is Impracticable to Confirm Accounts Receivable but the Auditor

question 47

Multiple Choice

If it is impracticable to confirm accounts receivable but the auditor obtains sufficient, appropriate evidence to verify the receivable balance by performing alternative procedures, the auditor's opinion should be unqualified.The audit report should

• A)Disclose the fact that alternative procedures were used because of a client-imposed scope limitation.
• B)Disclose in the opinion paragraph that confirmation of accounts receivable was impracticable.
• C)Not mention the alternative procedures.
• D)Include an explanatory paragraph that discloses the performance of alternative procedures.

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Definitions:

Economic Losses

Financial losses experienced by a business or economy, often resulting from unfavorable business conditions or poor investment decisions.

Perfectly Competitive

A market structure characterized by a large number of small firms, homogeneous products, free entry and exit, and perfect information, where no single firm can influence the market price.

Disequilibrium

A situation in a market where supply does not equal demand, leading to a temporary imbalance and potential for price changes.

Incentive

A factor, either monetary or non-monetary, that motivates individuals or entities to perform an action or engage in a certain behavior.