You are the auditor of Builder Merchants, a listed company which distributes materials to the construction industry. Total inventory is valued at £500,000 at year end. You find out that inventory was damaged post year end and its condition meant that it will be sold at reduced prices. The cost of the inventory in question is £250,000 and you estimate that the company would only be able to sell this product if they reduced the selling price to £100,000 . The Directors are unwilling to amend closing Inventory valuation in the Financial Statements for this.
 

Required.

Consider the scenario and state which type of qualification they should.

Answer rating: 100% (QA)

In this scenario the auditor of Builder Merchants has discovered that a portion of the inventory has ... View the full answer