Audit Opinions Practice Test

Of the following factors, which should most influence an auditor’s decision to modify the audit opinion of an issuer’s financial statements?

In the course of auditing Litmus, Inc., the auditors have uncovered a scheme by management to overvalue inventory in order to adhere to bond covenants. The firm approached management and indicated the practice would stop; however, they did not want to correct this year’s financial statements. The auditor should: