The auditor will do which of the following when the results of sample testing conclude that there is misstatement in excess of the tolerable misstatement?
A)Issue a disclaimer of opinion.
B)Throw out the sample.
C)Propose adjustments to the client.
D)Disclose the misstatement in the client's financial statements.

Question

Quizplus · Accepted Answer

When sample testing indicates a misstatement exceeding the tolerable misstatement, the auditor will propose adjustments to the client. This is done to correct the misstatement and ensure that the financial statements are not materially misstated. The auditor will also need to evaluate the effect on other areas of the financial statements impacted by the misstatement and consider if any further testing or adjustments are necessary. The auditor may need to issue a qualified or adverse opinion if the misstatement is deemed material and cannot be corrected through adjustments. A disclaimer of opinion may be necessary if the auditor is unable to obtain sufficient evidence to form an opinion on the financial statements. Throwing out the sample or disclosing the misstatement in the financial statements are not appropriate actions for the auditor to take in this situation.

The Auditor Will Do Which of the Following When the Results