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

question 71

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.If the auditor concludes that the financial statements do not require revision,but the entity refuses to revise or eliminate the material inconsistency,the auditor may

• A) issue an "except for" qualified opinion after discussing the matter with the entity's board of directors.
• B) consider the matter closed since the other information is not in the audited financial statements.
• C) disclaim an opinion on the financial statements after explaining the material inconsistency in a separate explanatory/emphasis-of-matter paragraph.
• D) revise the auditor's report to include a separate explanatory/emphasis-of-matter paragraph describing the material inconsistency.

---

Definitions:

Secretary-Treasurer

An official who performs both the duties of a secretary and a treasurer, typically within an organization.

Shareholders' Resolution

A formal decision or motion adopted by the shareholders of a corporation during a meeting, often relating to governance, policy, or financial decisions.

Quorum

The minimum number of members required to be present at a meeting to make the proceedings of that meeting valid.

Corporate Opportunity

A business opportunity or prospect that a company has the right to pursue, typically relevant in conflicts of interest situations.