When Audited Financial Statements Are Presented in a Client's Document

question 13

Multiple Choice

When audited financial statements are presented in a client's document containing other information,the auditor should

• A) Perform inquiry and analytical procedures to ascertain whether the other information is reasonable.
• B) Add an explanatory paragraph to the auditor's report without changing the opinion on the financial statements.
• C) Perform the appropriate substantive auditing procedures to corroborate the other information.
• D) Read the other information to determine that it is consistent with the audited financial statements.

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Definitions:

Negligent Hiring

A legal claim made against an employer for hiring an individual they either knew or should have known was likely to pose a risk of harm to others, based on their background or qualifications.

Legally Insolvent

The condition of being unable to pay debts as they fall due or having liabilities that exceed the value of assets.

Fiduciary Duty

A legal obligation to act in the best interest of another party, usually in a financial context.

Operation of Law

Changes in rights or obligations that occur automatically due to established legal rules, without the need for action or agreement by individuals.