Which of the Following Events Occurring After the Audit Report

question 25

Multiple Choice

Which of the following events occurring after the audit report release date most likely would cause auditors to make further inquiries about the previously-issued financial statements?

• A)An uninsured natural disaster occurs that may affect the entity's ability to continue as a going concern.
• B)A contingency is resolved that had been disclosed in the audited financial statements.
• C)New information is discovered concerning undisclosed lease transactions during the period under audit.
• D)A subsidiary is sold that accounts for 25% of the entity's consolidated net income.

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Definitions:

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, making them owners of a portion of the corporation.

Unaffiliated Directors

Board members who do not have a direct or substantial interest in the company, ensuring independence from the company’s management.

Outside Directors

Members of a company's board of directors who are not part of the company's management team and are theoretically independent of the company.

Business Contacts

Refers to the network of individuals and organizations with which a company maintains professional relationships to support its operations and growth.