AICPA CPA-Auditing Exam - 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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Jenise

2 months ago

A seems extreme, but I guess it depends on the situation.

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Detra

2 months ago

Wait, why would they just take management's word? Sounds fishy.

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Katheryn

3 months ago

Totally agree with C! More evidence is key.

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Lauran

3 months ago

I think B makes sense too, but C seems safer.

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Malcom

3 months ago

Definitely C, they need more evidence on inventory.

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Lisbeth

3 months ago

I practiced a similar question where the auditor had to decide between obtaining more evidence or issuing a disclaimer. I think additional evidence is usually the right move.

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Celeste

4 months ago

I’m a bit confused about whether consulting the audit committee is necessary in this situation. I feel like it depends on the severity of the issue.

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Helga

4 months ago

I think the auditor should probably obtain additional evidence about the inventory valuation. That seems like a logical step before making any conclusions.

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Leonard

4 months ago

I remember discussing how insufficient evidence might lead to a qualified opinion, but I'm not entirely sure if that's the best choice here.

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Cecily

4 months ago

This is a tricky one. I'm not entirely sure which action the auditor is most likely to take. I'd need to think through the implications of each option and how they align with the information provided in the question. Maybe I'll start by eliminating the options that don't seem as likely, then focus on the remaining choices.

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Werner

4 months ago

Okay, I think I've got this. The key is that the auditor concluded the evidence is insufficient, so they can't just accept management's representations. That rules out option D. And since the evidence is insufficient, they can't issue an unqualified opinion, so it's between a qualified opinion (option B) or a disclaimer (option A). I'd go with option B - consult the audit committee and issue a qualified opinion.

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Teddy

5 months ago

Hmm, I'm a bit unsure about this one. The question is asking about the auditor's likely actions, but there are a few options that seem plausible. I'll need to carefully consider the implications of each choice before deciding.

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Isaiah

5 months ago

This seems like a straightforward audit question. I'd focus on the key facts - the auditor concluded the evidence is not sufficient to support management's representations on inventory valuation. Based on that, I think the most likely action is to obtain additional evidence, so I'd go with option C.

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Stefanie

10 months ago

Haha, D! Why do the work when you can just get the boss to vouch for it? That's the auditor's job - make it look good and keep everyone happy.

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Glory

10 months ago

I'm going with D. Just get a statement from management and call it a day. Auditors these days are way too picky. As long as the numbers look good, who cares, right?

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Chantay

8 months ago

D) Obtain a statement from management supporting their inventory valuation.

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Hubert

9 months ago

C) Obtain additional evidence regarding the valuation of inventory.

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Kina

9 months ago

A) Consult with the audit committee and issue a qualified opinion.

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Honey

10 months ago

I think C is the way to go. The auditor has a duty to obtain sufficient evidence before reaching a conclusion. Anything less would be a dereliction of their responsibilities.

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Aron

9 months ago

The auditor needs to make sure they have all the necessary information before making a decision.

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Annamaria

9 months ago

Consulting with the audit committee is also important to ensure transparency.

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Johnson

9 months ago

I agree, obtaining additional evidence is crucial in this situation.

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Lura

10 months ago

I believe obtaining additional evidence regarding the valuation of inventory would be the best course of action to ensure accuracy in the financial statements.

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Ulysses

10 months ago

B sounds good to me. If the evidence is insufficient, the auditor should consult the audit committee and issue a qualified opinion. Why make a fuss when you can just slap a disclaimer on it?

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Salina

9 months ago

B) Consult with the audit committee and issue a qualified opinion.

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Loreen

9 months ago

C) Obtain additional evidence regarding the valuation of inventory.

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Maryanne

9 months ago

A) Consult with the audit committee and issue a qualified opinion.

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Pearly

10 months ago

I agree with Rana. It's important to communicate with the audit committee and provide a qualified opinion if the evidence is insufficient.

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Rana

10 months ago

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

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Leila

10 months 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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Domingo

9 months ago

Agreed, the auditor must ensure they have sufficient evidence before making a decision.

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Marla

9 months ago

C) Obtain additional evidence regarding the valuation of inventory.

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