Which of the Following Events Occurring After the Audit Report

question 130

Multiple Choice

Which of the following events occurring after the audit report release date most likely would cause auditors to make further inquiries about the previously issued financial statements?

• A) An uninsured natural disaster occurs that may affect the entity's ability to continue as a going concern.
• B) A contingency that had been disclosed in the audited financial statements is resolved.
• C) New information concerning undisclosed lease transactions during the period under audit is discovered.
• D) A subsidiary that accounts for 25% of the entity's consolidated net income is sold.

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Definitions:

Reactivity

The degree to which the process of measurement itself affects the measurement and the subject's behavior.

Social Desirability

The tendency of respondents to answer questions in a manner that will be viewed favorably by others, which can bias survey and research results.

Selection Bias

A distortion in statistical analysis resulting from the method of collecting samples, where the sample obtained is not representative of the population intended to be analyzed.

Responsiveness

The quality of reacting quickly and positively; being responsive to feedback or changes.