Assume That Rory Is Auditing the Financial Statements of Augusta

question 50

Multiple Choice

Assume that Rory is auditing the financial statements of Augusta, Inc. Rory completes his fieldwork on February 25 and his report (along with Augusta's financial statements) is issued on March 1. On March 3, a hurricane destroys a warehouse that contains a significant amount of uninsured inventory. Which of the following best describes Rory's responsibility with respect to the effects of this hurricane on Augusta's financial statements?

• A)Because the inventory was included in the financial statements audited by Rory, he is required to perform additional procedures and reissue his report on the revised financial statements.
• B)Because the hurricane occurred after the date of Rory's report, he has no responsibility to perform additional procedures or reissue his report.
• C)Because the hurricane occurred prior to the next fiscal quarter, Rory is required to perform additional procedures and reissue his report on the revised financial statements.
• D)Because the hurricane occurred after the release of the financial statements and Rory's report, he has no responsibility to perform additional procedures or reissue his report.

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Definitions:

Knowledge Management

The processes using intellectual capital for competitive advantage.

Intellectual Assets

Intangible resources and knowledge that a company possesses, which can include patents, trademarks, business methodologies, and other forms of intellectual property that provide a competitive advantage.

Strategic Force

Denotes a military or organizational capability designed and utilized to achieve strategic objectives, often involving long-range or significant impact operations.

Decision-Making Process

A systematic approach to making choices among possible options to achieve a desired outcome.