Which of the following circumstances most likely would cause an auditor to consider whether material misstatements exist in an entity's financial statements?

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A. Supporting records that should be readily available are frequently not produced when requested. B. Reportable conditions previously communicated have not been corrected. C. Clerical errors are listed on a monthly computer-generated exception report. D. Differences are discovered during the client's annual physical inventory count. Answer: A Supporting records which should be readily available but are not should arouse suspicion. Reportable conditions previously reported may not have been corrected due to legitimate factors such as cost-benefit concerns or insufficient time since the condition was reported. Clerical errors which come to light through the client's system serve to help correct potential misstatements. Some differences are commonly discovered during a physical inventory count due, for example, to the volume of items which typically must be counted. An auditor is testing internal control procedures that are evidenced on an entity's vouchers by matching random numbers ...
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