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Tax authorities' audit of tax returns.
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If reported correctly, the division would not have shown an increase in net income.
An overstatement of year-end inventory.
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During the preliminary review, the auditor notes the following changes in financial data compared to the prior year: Sales have increased.
Answer: D, question NO: 3, when questions arise on the appropriateness of the going concern assumption made by management and the existence of material misstatements which was not adequately disclosed in the financial statements would lead to auditor's.


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