Assume You Completed Your Fieldwork on the XYZ Company Audit

question 95

Essay

Assume you completed your fieldwork on the XYZ Company audit of the December 31, 2025 financial statements on February 11, 2026.On February 13, 2026, you discovered that XYZ's largest customer filed for bankruptcy.XYZ has not yet released the financial statements.What is your responsibility as an auditor and what steps should be taken, if any?

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Definitions:

Dividend Payments

The distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Other Items

A general term referring to transactions or events that do not neatly fit into the main categories of a financial statement but may still impact the financial health of a business.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, ending with the net income or loss for that period.

Advertising Expense

Advertising expense is the cost incurred in promoting products or services through various media to increase sales.