The auditor while verifying prepaid insurance has concluded that there is inadequate insurance of building. He should ________.

modify his audit report

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insist it should be disclosed in the notes to financial statements

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write it in letter of weakness

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Both B and C

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Solution

The correct option is D Both B and C
It is duty of the auditor to verify that sufficient insurance cover is taken by the organization against all the assets of the firm. It ensure to safeguard the organization from any mis happening and cover the future losses.

If auditor has noticed that sufficient insurance coverage is not taken by the firm, this may be disclosed with notes to account and write it in letter of weakness.

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