After the Balance Sheet Date, but Prior to the Issuance

question 95

Multiple Choice

After the balance sheet date, but prior to the issuance of the audit report, the client suffers an uninsured loss of their inventory as a result of a fire. The amount of the loss is material. The auditor should

• A) adjust the financial statements for the year under audit.
• B) add a paragraph to the audit report.
• C) advise the client to disclose the event in the notes to the financial statements.
• D) advise the client to delay issuing the financial statements until the economic loss can be determined.

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Definitions:

Non-Litigious

Matters or activities not involving litigation or legal proceedings.

Binding Arbitration

An arbitration agreement where the decision made by the arbitrator is legally binding and enforceable, similarly to a court judgment.

Distress

Seizure by a landlord of any property left by a tenant and holding it until the rent is paid or selling it to pay rent owing.

Relief against Forfeiture

Judicial intervention to protect against the loss of rights or property due to failure to meet legal obligations.