You Are Auditing Green Corporation for the Calendar Year 2020

question 44

Essay

You are auditing Green Corporation for the calendar year 2020. Among other items related to the audit, Green Corporation was being sued for personal injury resulting from the malfunction of one of their products. The lawsuit was initiated by Sue Ewe in September, 2020. Management and the company's outside legal counsel estimated the loss from the suit to be approximately $250,000. This amount is accrued and properly disclosed in the footnotes of the financial statements. You have no reason to believe that the estimate is inaccurate. You completed your audit and dated your report March 2, 2021. The financial statements were issued on March 14, 2021. On March 20, 2021, you read in a national business periodical that the jury in the trial awarded Sue Ewe $1.5 million.Required:Discuss the nature of these events and what responsibility, if any, you have regarding the news of March 20, 2021.

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Definitions:

Positron-Emission Tomography

A diagnostic imaging test using a radioactive substance to visualize and measure changes in metabolic processes and other physiological activities.

Radioactive Substance

A material that emits radiation as a result of the decay of unstable atomic nuclei.

Brain Activity

The functioning and processes occurring within the brain, including neural activity and cognitive operations.

Electroencephalogram

An electroencephalogram, or EEG, is a test that measures electrical activity in the brain to help diagnose neurological conditions.