Before Reissuing the Prior Year's Auditor's Report on the Financial

question 228

Multiple Choice

Before reissuing the prior year's auditor's report on the financial statements of a former client, the predecessor auditor should obtain letters of representation from the:

• A) Former client's management and the board of directors.
• B) Former client's attorney and management.
• C) Former client's board of directors and the successor auditor.
• D) Successor auditor and the former client's management.

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Definitions:

Cost Method

This accounting approach involves recording an investment at its original cost without adjusting for changes in market value.

Equity Method

An accounting technique used to record investments in other companies where the investor has significant influence but does not have full control.

Consolidated Financial Statements

Financial statements that show the financial position and results of operations of a parent company and its subsidiaries as a single entity.

Cost Method

The Cost Method is an accounting approach where investments are recorded at their acquisition cost, without adjustment for changes in market value.