Risk Of Material Misstatement Practice Test

You are performing an audit of a nonissuer manufacturing company. During interim testing, you noted discrepancies between the perpetual inventory records and the general ledger, and management stated the differences will be "trued up" at year-end; there is no documented inventory reconciliation process and cycle counts are not reviewed by anyone independent of the warehouse supervisor. Based on the auditor's assessment, which procedure should be prioritized?

You are the auditor of an issuer in an integrated audit (audit of financial statements and audit of internal control over financial reporting). The company recorded significant manual top-side journal entries to revenue on the last day of the quarter, and the entries were approved by the CFO without documented support; the company also announced it is "at risk" of missing analyst EPS expectations. What is the most appropriate response to the identified risk?