The auditor of Pankhuri Minerals Ltd. is unable to attend the inventory count at a remote mine because it is in an area declared unsafe due to flooding. Inventory there is material. Under SA 501, the auditor should:

Correct answer: B) Perform alternative audit procedures to obtain evidence on existence and condition, and modify the opinion under SA 705 if this is not possible

Explanation

Where attendance is impracticable, for example due to safety concerns, SA 501 requires the auditor to perform alternative procedures such as inspecting subsequent sales documents for specific items. If that is not possible, the auditor modifies the opinion under SA 705. A certificate from an interested official is weak evidence, and mere inconvenience does not justify non-attendance.