Which of the following is least likely to result in an emphasis-of-matter paragraph being added to an unmodified auditor's report on the financial statements of a client that sells jewelry through a retail store?
A) A decision by the auditor to emphasize that the client is a part of a larger organization.
B) Reliance placed upon a specialist to evaluate the diamonds.
C) A change from FIFO to specific identification accounting for inventory.
D) A question as to whether the client will be able to remain a going concern.

Question

Quizplus · Accepted Answer

Reliance placed upon a specialist to evaluate the diamonds is a routine procedure in the jewelry industry, and is unlikely to result in an emphasis-of-matter paragraph being added to the auditor's report. A change in accounting method (choice C) may warrant disclosure, but is not a significant issue. A decision to emphasize the client's relationship with a larger organization (choice A) is also unlikely to result in an emphasis-of-matter paragraph unless the relationship has a material impact on the financial statements. The possibility of the client being unable to continue as a going concern (choice D) is a significant issue that may require disclosure.

Which of the Following Is Least Likely to Result in an Emphasis-Of-Matter