A Major Customer of an Entity Suffers a Fire After

question 6

Multiple Choice

A major customer of an entity suffers a fire after year-end, but just prior to completion of audit fieldwork. The entity believes that this event could have a significant direct effect on the financial statements. The auditor should

• A) Advise management to disclose the event in the notes to the financial statements.
• B) Disclose the event in the auditor's report.
• C) Withhold submission of the auditor's report until the extent of the direct effect on the financial statements is known.
• D) Advise management to adjust the financial statements.

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Definitions:

Recognizing Speech

The process by which sounds are interpreted as speech, often referring to technology that can interpret human speech into textual form.

Conduction Hearing Loss

Hearing impairment caused by a problem in the outer or middle ear, which interferes with the conduction of sound to the inner ear.

Optic Nerve

The nerve that transmits visual information from the retina to the brain, playing a critical role in vision.

Axons

Long, threadlike parts of nerve cells along which impulses are conducted from the cell body to other cells.