Small and Tall, CPAs, Completed the December 31, 2020 Audit

question 4

Multiple Choice

Small and Tall, CPAs, completed the December 31, 2020 audit of Big Company on February 10, 2021. After the audit report release date, an outstanding lawsuit against Big Company was settled for materially more than recorded in the December 31, 2020 financial statements. The amount recorded in the financial statements represented the best estimate of management and the company's attorneys at the time the audit was completed. Based on this new information, Small and Tall, CPAs should

• A)determine whether persons are currently relying on the auditors' reports.
• B)advise the client to make appropriate changes in the financial statements and reissue them.
• C)notify each member of the board of directors of Big Company.
• D)take no action since the event took place after the audit report release date.

---

Definitions:

Uncontrollable Aggression

An intense and often violent form of behavior where an individual is unable to regulate their angry impulses.

Social Psychology

The scholarship surrounding how individuals’ minds, emotions, and actions are directed by the presence of others, be it actual, fictional, or intimated.

Suicide

The act of intentionally causing one's own death, often as a response to distress, mental health conditions, or feelings of hopelessness.

Instinct Theories

Theories suggesting that behavior is driven by innate, biologically determined instincts, which are automatic and unlearned responses to stimuli.