Which of the Following Events Occurring After the Audit Report

question 25

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 is resolved that had been disclosed in the audited financial statements.
• C)New information is discovered concerning undisclosed lease transactions during the period under audit.
• D)A subsidiary is sold that accounts for 25% of the entity's consolidated net income.

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Definitions:

Job Specialization

The process of focusing one's occupational concentration on a specific area of expertise, allowing for greater efficiency and expertise.

Division of Labor

The allocation of different parts of a manufacturing process or task to different people in order to improve efficiency.

Concurrent Engineering

Is a method of designing and developing products in which different stages run simultaneously, rather than consecutively, to reduce product development time.

Informal Communication

The exchange of information without the constraints of formal structures or channels in an organization.