Choose the one correct answer. 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 difference between your expectation using the gross profit method of estimating inventory as against the client reported balance is above audit materiality level for audit of inventory. What should you 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 a qualified opinion on the basis of a material misstatement in the client's inventory.
Choose the one correct answer.
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 difference between your expectation using the gross profit method of estimating inventory as against the client reported balance is above audit materiality level for audit of inventory. What should you 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 a qualified opinion on the basis of a material misstatement in the client's inventory.
e. None of the above
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