As the auditor was enagaged to undertake the audit after the year- end, and he was unable to physically examine inventory, the auditor has not accumulated sufficient appropriate evidence to determine whether the financial report is presented fairly. The auditor must depart from the unmodified audit report because:
A) the scope of the audit has been restricted by circumstances beyond either the client's or auditor's control.
B) the auditor has lost independence.
C) the financial report has not been prepared in accordance with accounting standards.
D) the scope of the audit has been limited.

Question

Quizplus · Accepted Answer

The auditor's inability to physically examine inventory limits the scope of the audit since inventory is a material account on the financial report. As a result, the auditor cannot accumulate sufficient appropriate evidence to provide reasonable assurance that the financial report is presented fairly in all material respects. Therefore, the auditor must depart from the unmodified audit report due to the scope limitation.

As the Auditor Was Enagaged to Undertake the Audit After