Weedy Co is your audit client, and you are drafting the audit opinion on its financial statements. You have concluded that revenue is overstated by $50,000, due to a fraud which was discovered operating during the year. Management has refused to adjust for the error. The materiality level has been set at $175,000. What is the most likely impact of this on the auditor's opinion?

Adverse opinion

Unmodified opinion

Disclaimer of opinion

Qualified due to material misstatement

2- Which of the following statements regarding inventory counts is correct?

Where inventory is material, the auditor is required to attend the inventory count unless this is impracticable

When attending an inventory count, the auditor only observes the counting and does not perform any testing

There is no legal requirement for an annual inventory count to take place

Failing to perform an inventory count at the year end, when inventory is managed using a perpetual system, leads to a high risk of material misstatement of inventory