question archive Management believes that the amount at which the inventory balance is stated in the financial statements is reliable
Management believes that the amount at which the inventory balance is stated in the financial statements is reliable
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Management believes that the amount at which the inventory balance is stated in the financial statements is reliable. they believe this because the company used a perpetual system for inventory recording and followed a lower of cost or net realisable value method for inventory valuation. However, after reviewing physical inventory count instructions and conducting substantive procedure for inventory balances, the auditor determined that the accounting records are not properly maintained and not sufficiently reliable. You are not satisfied as to the year end inventory balances.
Question)State what type of opinion should be formed by the auditor for this situation and briefly describe the basis of issuing such opinion.
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QUALIFIED OPINION.
Step-by-step explanation
The company's accounting records are not properly maintained and not sufficiently reliable. Its not disclaimer since the auditor obtain sufficient evidence and it is not also adverse because it is not pervasive.
