You are auditing a company with major production facilities outside the United States. The company has 50%

Question:

You are auditing a company with major production facilities outside the United States. The company has 50% of its inventory in a country with civil unrest. The firm is unable to confirm whether the inventory still exists, and you are unable to visit this country to verify that the inventory is still there. Inventory is 30% of the firm's assets.

a. What audit opinion are you likely to issue in this situation?

b. What would cause you to change your first opinion? Is the significance of inventory to the balance sheet important to your decision?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...