AICPA Exam CPA-Auditing Topic 3 Question 110 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 110
Topic #: 3

At the conclusion of an audit, an auditor is reviewing the evidence gathered in support of the financial statements. With regard to the valuation of inventory, the auditor concludes that the evidence obtained is not sufficient to support management's representations. Which of the following actions is the auditor most likely to take?

AConsult with the audit committee and issue a disclaimer of opinion.

BConsult with the audit committee and issue a qualified opinion.

CObtain additional evidence regarding the valuation of inventory.

DObtain a statement from management supporting their inventory valuation.

Show Suggested Answer

Suggested Answer: C

Choice 'c' is correct. If an auditor has doubts about a material assertion (such as the valuation of inventory), he/she should gather sufficient evidence to eliminate the doubt.

Choices 'a' and 'b' are incorrect. The auditor would not consult with the audit committee regarding the sufficiency of audit evidence obtained, as this is determined based on the auditor's own judgment. In addition, if the auditor is able to obtain additional evidence, it might be possible to issue an unqualified opinion. Finally, even if no additional evidence is available, the auditor will still need to decide whether a qualified opinion or a disclaimer of opinion is more appropriate, depending on materiality.

Choice 'd' is incorrect. Since management representations are in fact 'statements from management,' obtaining additional statements from management would not provide additional support.

by Izetta at Apr 06, 2025, 10:59 AM

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Rana

6 days ago

I think the auditor should consult with the audit committee and issue a qualified opinion.

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Leila

8 days ago

Definitely C. The auditor needs to gather more evidence to support the inventory valuation before issuing an opinion. Anything less would be irresponsible.

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