Brandon Is Working on the Audit of Michum Inc

question 59

Multiple Choice

Brandon is working on the audit of Michum Inc.In accordance with CAS 550 (related parties) ,Brandon had obtained a management confirmation of all related-party transactions.When auditing the purchasing cycle of Michum,Brandon found that the company had purchased over $500 000 of merchandise from Elite Crust Inc. ,a company that is owned by the CEO's brother.The $500 000 purchase is a material amount and it was not included in the confirmation provided by Michum.Brandon should

• A)inform the audit committee.
• B)qualify the audit report.
• C)discuss this issue with the management of Michum.
• D)reduce materiality to increase the likelihood of discovering other undisclosed related party transactions.

---

Definitions:

Alan Baddeley

A British psychologist known for his work on the model of working memory, which describes how information is stored and manipulated in short-term memory.

Working Memory

A cognitive system responsible for temporarily holding and processing information relevant to cognitive tasks such as learning, reasoning, and comprehension.

Implicit Memories

Memories that influence our behaviors and experiences unconsciously, without our deliberate recall of these memories.

Motor Skills

The abilities required to control the precise movements of muscles to perform specific actions, often divided into fine (small movements) and gross (larger movements) motor skills.