During the audit of Valley Corp., you determine that inventory may be misstated. Valley Corp. refuses to allow you to expand your procedures to make an actual determination regarding the misstatement.

1. Determine if the facts and circumstance require modification of the audit opinion.

2. Classify the misstatement as immaterial, material or highly material. If you cannot determine the appropriate classification, indicate the additional information needed.

3. Explain which audit opinion you would issue. If you have not concluded the level of materiality for item 2, explain the appropriate opinion for each level of materiality.

Answer rating: 100% (QA)

1 Misstatement of the inventory is one of a key audit concern given that it shows misappropriation and misapplication of assets and hence fraud An ove... View the full answer