A Major Customer of an Audit Client Suffers a Fire

question 7

Multiple Choice

A major customer of an audit client suffers a fire just prior to completion of year-end fieldwork. The audit client believes that this event could have a significant direct effect on the financial report. The auditor should:

• A) advise management to disclose the event in notes to the financial report.
• B) disclose the event in the auditor's report.
• C) withhold submission of the auditor's report until the extent of the direct effect on the financial report is known.
• D) advise management to adjust the financial report.

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Definitions:

Negotiators

Individuals or parties involved in discussions aimed at reaching an agreement or resolving a dispute through dialogue and compromise.

Concessions

Concessions are compromises or adjustments made by one party in negotiations, often to reach an agreement or resolve a dispute.

Time Deadline

A specific point in time by which a task or project must be completed or delivered.

Conflict Resolution

The process of resolving disputes or conflicts between parties through communication, negotiation, and problem-solving strategies to achieve mutual agreement.