Which of the following circumstances most likely would cause an auditor to believe that material misstatements may exist in an entity's financial statements?
A)Accounts receivable confirmation requests yield significantly fewer responses than expected.
B)Audit trails of computer-generated transactions exist only for a short time.
C)The chief financial officer does not sign the management representation letter until the last day of the auditor's fieldwork.
D)Management consults with other accountants about significant accounting matters.

Question

Quizplus · Accepted Answer

If accounts receivable confirmation requests yield significantly fewer responses than expected, it may indicate that the entity's customers either cannot confirm or contradict the information in their accounts, or they do not exist. This increases the risk of material misstatements in the financial statements, particularly related to the completeness and existence assertions. It may also suggest that there are weaknesses in the entity's internal control over financial reporting.

Which of the Following Circumstances Most Likely Would Cause an Auditor