In addition to direct impacts on the financial statements,the auditor also needs to consider indirect effects.An assessment of client objectives and strategies can reveal issues that could lower income or cause contingent liabilities.Which of the following could cause lost sales,increases in warranty expenses,and product liability claims?
A)poor product quality
B)excessive advertising
C)ineffective projections
D)inaccurate budgets

Question

Quizplus · Accepted Answer

Poor product quality can lead to lost sales, increases in warranty expenses, and product liability claims, all of which can have indirect effects on the financial statements. Excessive advertising, ineffective projections, and inaccurate budgets may have different types of indirect effects but are not directly linked to these particular issues.

In Addition to Direct Impacts on the Financial Statements,the Auditor