A Major Customer of an Audit Client Suffers a Fire

question 21

Multiple Choice

A major customer of an audit client suffers a fire just after year-end and 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:

Faulty Theories

Hypotheses or beliefs that have been proven wrong or lack sufficient evidence or validation.

Conflicts

Disagreements or disputes between individuals or groups that result from opposing or incompatible needs, desires, or interests.

Negative Results

Outcomes of an experiment or research that do not support the initial hypothesis or expected findings.

Groups

Collections of individuals who come together with common goals or interests, sharing interaction and often working towards collective objectives.