The Audit Procedures for the Subsequent Events Review Can Be

question 6

Multiple Choice

The audit procedures for the subsequent events review can be divided into two categories: (1) procedures integrated as a part of the verification of year-end account balances, and
(2) those performed specifically for the purpose of discovering subsequent events. Which of the following procedures is in the first category?

• A) Inquire of client regarding contingent liabilities.
• B) Obtain a letter of representation written by client.
• C) Subsequent period sales and purchase transactions are examined to determine whether the cutoff is accurate.
• D) Review journals and ledgers of year 2 to determine the existence of any transactions related to year 1.

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Definitions:

Subsidiary Company

A company that is owned or controlled by another company, which is referred to as the parent company.

Licensing

A business agreement in which one party allows another to use its brand, patent, or technology for a fee or royalty.

Turnkey Operations

A type of project that is constructed so that it can be sold to any buyer as a completed product or operation.

Turnkey Operation

A type of project that is constructed so that it can be sold to any buyer as a completed product or service.