Auditors Must Be Concerned with Events That Occur Subsequent to the Balance

Question

Examlex · Accepted Answer

The Answer is a.The two types of subsequent events are:
Type 1-events that provide additional evidence about conditions that existed at the balance sheet date and affect the estimates included in the statements.
Type 2-events that provide evidence about conditions that arose subsequent to the balance sheet date and require disclosure in the financial statements.
b.Auditors have a responsibility to search for material subsequent events to the date of the auditors' report.
c.Procedures that are used to search for subsequent events include (only three required):
-Review interim financial statements.
-Review minutes of directors' and stockholders' meetings.
-Make inquiries of officers.
-Obtain a letter from the client's attorney.
-Obtain a letter of representations from management

Auditors Must Be Concerned with Events That Occur Subsequent to the Balance

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