Based on conversations with the owner-manager of an audit client, the auditor ascertained that the company's primary motivation is to avoid paying income taxes. Based on this motivation, which account balance assertion for ending inventory will the auditor be most concerned about verifying?
A)Existence or occurrence.
B)Completeness.
C)Rights and obligations.
D)Observation.

Question

Quizplus · Accepted Answer

The auditor is most concerned about verifying the completeness assertion for ending inventory because the company's primary motivation is to avoid paying income taxes. The completeness assertion states that all inventory that should be included in the financial statements is included. If the company is trying to avoid paying taxes, it may be tempted to understate its inventory balance by omitting some inventory items from the financial statements.

Based on Conversations with the Owner-Manager of an Audit Client