#19

At the conclusion of the audit of Peabody Corporation, the audit firm Herman CPAs notes that a difference of opinion exists between he auditors and management on the allowance for doubtful accounts and associated bad debt expense. The auditors have proposed adjusting entries increasing the allowance and expense but management have refused to record the adjustment. Based on this nformation, which of the following might the auditors decide to do? The auditors are likely to issue an adverse opinion on the client's financial statements. If the client agrees to record the audit firms' proposed adjusting entry in the future, the auditors can always go back and modify the audit opinion. The auditors are likely to consider adding a critical audit matter paragraph to the audit report. This may be added on the grounds that the difference in opinion is considered material to the financial statements. The auditors will likely issue a scope limitation surrounding the audit of accounts receivable and the related allowance accounts. This will ultimately lead to a disclaimer of opinion. None of these answer choices are correct