On March 15, 2013, Kent, CPA, issued an unqualified opinion on a client’s audited financial statements for the year ended December 31, 2012. On May 4, 2013, Kent’s internal inspection program disclosed that engagement personnel failed to observe the client’s physical inventory. Omission of this procedure impairs Kent’s present ability to support the unqualified opinion. If the stockholders are currently relying on the opinion, Kent should first
A. Advise management to disclose to the stockholders that Kent’s unqualified opinion should not be relied on.
B. Undertake to apply alternative procedures that would provide a satisfactory basis for the opinion.
C. Reissue the auditors’ reports and add an explanatory paragraph describing the departure from generally accepted auditing standards.
D. Compensate for the omitted procedure by performing tests of controls to reduce audit risk to a sufficiently low level.
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