The auditors conclude that there is a material inconsistency in the "other information" in an annual report to shareholders containing audited financial statements.If the auditors conclude that the financial statements do not require revision,but the entity refuses to revise or eliminate the material inconsistency,the auditors may
A)Issue a qualified opinion on the entity's financial statements,citing a departure from generally accepted accounting principles.
B)Consider the matter closed since the other information is not included in the audited financial statements.
C)Issue an adverse opinion on the entity's financial statements due to inadequate disclosure.
D)Revise the report on the entity's financial statements to include an other-matter paragraph describing the material inconsistency.

Question

Quizplus · Accepted Answer

The best choice in this case would be to revise the report on the entity's financial statements to include an other-matter paragraph describing the material inconsistency. While the financial statements themselves may not require revision, the auditors have identified a material inconsistency and have a responsibility to communicate that to shareholders. By including an other-matter paragraph in their report, the auditors can alert shareholders to the issue without issuing a qualified or adverse opinion on the financial statements.

The Auditors Conclude That There Is a Material Inconsistency in the "Other