Question

Which of the following situations would most likely require special audit planning by

the auditors?
A) Some items of factory and office equipment do not bear identification numbers.
B) Depreciation methods used on the client's tax return differ from those used on the books.
C) Assets costing less than $500 are expensed even though the expected life exceeds one year.
D) Inventory is comprised of precious stones.

Answer 1

Special audit planning is most needed for an inventory of precious stones due to their high value and the complexity involved in auditing such items. Option d.

Step-by-step explanation:

The situation that would most likely require special audit planning by the auditors is D) Inventory is comprised of precious stones. Auditors need to plan meticulously due to the high value and unique nature of such inventory. These items can be easily miscounted, misclassified, or subject to theft, and may require special expertise to evaluate. Additionally, verifying the existence and the valuation of these stones often involves direct physical inspection and possibly third-party valuations. This complex process differs significantly from auditing more standard inventory items.