The following conditions exist: The client has a standard sales contract, but sales personnel frequently modify the terms of the contract The nature of the modifications can affect the timing and amount of revenue recognized. Individual sales transactions are frequently material to the entity, and the gross margin can vary significantly for each transaction. The company does not have procedures in place for the accounting function to regularly review mocifications to sales contract terms. Although management reviews gross margins on a monthly basis, the significant differences in gross margins on individual transactions make it difficult for management to identify potential misstatements. Absent any other control deficiencies, the auditor would Improper revenue recognition has occurred, and the amounts have been material. issue a qualified opinion because a significant deficiency exists. issue an adverse opinion because a significant deficiency exists. issue an adverse opinion because a material weakness exists. issue an unqualified opinion because control deficiencies are not material