An Auditor Was Unable to Physically Count the Inventory at Year-End

Multiple Choice

An auditor was unable to physically count the inventory at year-end due to a flood arising from a hurricane.The inventory represents over 80% of the current assets and 60% of the total assets on the balance sheet.In addition,while completing other audit procedures,the auditor determines that a material investment reported using the cost method should instead be reported using the equity method.How should the audit report by these two circumstances?

A) The auditor must resign from the engagement to avoid association with false or misleading information.
B) A qualified opinion should be issued,indicating both a scope restriction and a GAAP departure.The basis for disclaimer paragraph should explain both that the inventory could not be counted and that the impact of the investment not being presented using the equity method.
C) A disclaimer of opinion should be issued: the basis for disclaimer paragraph should explain that inventory could not be counted and also explain the impact of the investment not being presented using the equity method.
D) An adverse audit opinion should be issued,with the inventory and investment issues explained in the basis for adverse opinion paragraph.