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.

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Definitions:

Platelets

are small blood cells that play a crucial role in clotting, preventing excessive bleeding when blood vessels are injured.

Hematocrit

refers to the proportion of blood volume that is occupied by red blood cells, a measure important in diagnosing and treating various conditions.

Males

Referring to the sex that produces small, mobile gametes (such as sperm in humans) which fertilize the larger gametes produced by females.

Females

Individuals of a species that are typically characterized by two X chromosomes, capable of producing eggs, and in many species can carry offspring through pregnancy and childbirth.