When Substantive Tests Are Performed before the Balance Sheet Date

question 47

Multiple Choice

When substantive tests are performed before the balance sheet date, at a minimum the auditor should, at or after the balance sheet date:

• A) obtain a letter from management stating that no significant changes occurred in the account balances between the two dates.
• B) perform analytical procedures, including comparison of the account balances at the two dates.
• C) reconfirm all balances that were confirmed at interim.
• D) confirm all balances that were not confirmed at interim.
• E) perform tests of reasonableness on all balances that were not confirmed at interim.

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Definitions:

U.S. Antitrust Laws

Laws in the United States designed to prevent monopolies and promote competition among businesses.

Fraud

Deliberate deception or misrepresentation intended to result in financial or personal gain at the expense of another party.

Auditor Liability

pertains to the legal responsibility auditors bear for failing to detect or report inaccuracies in financial statements they audit, leading to damages for users of these statements.

Normal Audit

A regular examination and evaluation of an entity's financial statements and records to ensure accuracy and compliance with accounting standards and regulations.