When an Auditor Observes That Personnel Who Are Responsible for Physically

question 24

Multiple Choice

When an auditor observes that personnel who are responsible for physically counting inventory are not following the inventory instructions, the auditor should

• A) contact a client's supervisor to correct the problem.
• B) modify the client's physical inventory instructions.
• C) not discuss the problem with client's supervisor in order to maintain independence.
• D) assign audit staff to the inventory count.

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Definitions:

Risk Aversion

The tendency to prefer certainty over uncertainty, typically by choosing safer or guaranteed outcomes over riskier ones in decision-making.

Small Business

Any independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people.

Competitive Area

The space or domain in which businesses compete against each other for market share.

Independently Owned

Refers to a business or property that is owned by an individual or a group without corporate or external control.