Of the following scenarios, which would most likely result in an audit firm not accepting an engagement?
A)Some internal controls related to credit granting procedures are not operating effectively.
B)IT systems and architecture are antiquated and not capable of current processing and recording requirements.
C)Significant related party transactions, of which the auditor has been advised, are a routine part of business.
D)The client has advised that the auditor will be unable to confirm certain inventories with no valid reason given.

Question

Quizplus · Accepted Answer

The client's refusal to allow inventory confirmation without a valid reason suggests potential fraud or misstatement, which would pose a high risk for the audit firm and likely result in them declining the engagement. A, B, and C may pose challenges for the audit but can be addressed through appropriate audit planning and procedures.

Of the Following Scenarios, Which Would Most Likely Result in an Audit