When a Subsequent Event Provides Evidence About Conditions That Existed

question 21

Multiple Choice

When a subsequent event provides evidence about conditions that existed at the balance sheet date,what is the best course of action for the auditor to follow?

• A)Assign a specialist.
• B)Ensure that the financial statements are adjusted to reflect the information,including any necessary footnote disclosures.
• C)Shop for an opinion that fits the desired type of event.
• D)Provide management with a new engagement letter to document the terms of the revised arrangement.

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Definitions:

Purchasing Value

The worth of goods or services that can be bought with a specified amount of currency.

Spot Exchange Rates

Refers to the current exchange rate at which currencies can be traded immediately or on the spot.

Overvalued Currency

A currency whose value is higher than its actual demand or economic fundamentals justify.

Non-Performing Loan

A loan in which the borrower is in default and has not made scheduled payments of principal or interest for a certain period, typically 90 days.