Which of the following circumstances most likely would cause an auditor to consider whether material misstatements exist in an entity's financial statements?

Question

Quizplus · Accepted Answer

Choice "A" is correct. Supporting records that should be readily available but are frequently not produced when requested would cause an auditor to consider whether material misstatements exist. Choice "B" is incorrect. Failure to correct significant deficiencies in internal control may represent a conscious decision by management to accept that degree of risk because of cost or other considerations. Although this is a fraud risk factor, the auditor is more likely to be concerned about missing audit evidence. Choice "C" is incorrect. Clerical errors listed on a monthly computer-generated exception report would be a control over data processing that would tend to minimize the risk of material misstatement. Choice "D" is incorrect. Differences being discovered during the client's annual physical inventory count is a common occurrence at most companies and would not necessarily indicate that a material misstatement exists.

Which of the Following Circumstances Most Likely Would Cause an Auditor