As part of your audit of a client’s inventory balance, you created an expectation of what should be the inventory balance by using the gross profit method. The only concern was the difference between your expectation and the client’s financial statements which come in the form of using the gross profit method of estimating inventory as against the client reported balance which is below audit materiality level for audit of inventory. What is the best choice to do next? * A. Discuss with the management the implication of the significant difference and propose an adjusting journal entry accordingly. B. Extend audit procedures by doing further analytical procedures on the inventory balance. C. Extend audit procedures by doing test of details of the account balance. D. Issue an unqualified opinion
As part of your audit of a client’s inventory balance, you created an expectation of what should be the inventory balance by using the gross profit method. The only concern was the difference between your expectation and the client’s financial statements which come in the form of using the gross profit method of estimating inventory as against the client reported balance which is below audit materiality level for audit of inventory. What is the best choice to do next? *
A. Discuss with the management the implication of the significant difference and propose an
B. Extend
C. Extend audit procedures by doing test of details of the account balance.
D. Issue an unqualified opinion
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