An Auditor Concludes That There Is a Material Inconsistency in the Other

question 431

Multiple Choice

An auditor concludes that there is a material inconsistency in the other information in an annual report to shareholders containing audited financial statements. The auditor believes that the financial statements do not require revision, but the client is unwilling to revise or eliminate the material inconsistency in the other information. Under these circumstances, what action would the auditor most likely take?

• A) Consider the situation closed because the other information is not in the audited financial statements.
• B) Issue an "except for" qualified opinion after discussing the matter with the client's audit committee.
• C) Disclaim an opinion on the financial statements after explaining the material inconsistency in a separate explanatory paragraph.
• D) Revise the auditor's report to include a separate explanatory paragraph describing the material inconsistency.

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Definitions:

Utility Function

A mathematical representation of how a consumer ranks different bundles of goods based on their level of satisfaction or utility.

Endowed

Refers to the initial allocation of goods, resources, or wealth an individual or entity possesses.

Units

Measurements used to quantify physical quantities, such as kilograms for mass or meters for length.

Utility Function

A formula that ranks various outcomes by their level of satisfaction or utility to a consumer.