With respect to the auditor's planning of a year-end examination, which one of the following statements is ALWAYS true?
A) An engagement should not be accepted after the financial year ends.
B) An inventory count must be observed at the balance sheet date.
C) The client's audit committee should not be told of the specific audit procedures that will be performed.
D) It is an acceptable practice to carry out substantial parts of the examination at interim dates.

Question

Quizplus · Accepted Answer

It is acceptable to carry out substantial parts of the examination at interim dates, and this is often necessary for auditors to complete the work within a reasonable timeframe. A, B, and C are not always true statements, as there may be exceptions depending on the specific circumstances of the engagement. For example, an engagement may be accepted after the financial year ends if the auditor determines there is enough evidence to support the audit opinion. Similarly, an inventory count may not need to be observed at the balance sheet date if the auditor determines that alternative procedures provide sufficient assurance. The client's audit committee may also need to be informed of specific audit procedures if it is necessary for transparency and effective communication.

With Respect to the Auditor's Planning of a Year-End Examination