After Issuance of the Auditor's Report,the Auditor Has No Obligation

question 67

Multiple Choice

After issuance of the auditor's report,the auditor has no obligation to make any further inquiries with respect to audited financial statements covered by an auditor's report unless

• A) A lawsuit in which risk of loss was considered remote is resolved in the company's favor.
• B) A development occurs that may affect the client's ability to continue as a going concern.
• C) A material fraud is initiated by an employee after the report is issued.
• D) Evidence of significant, non-arms-length, related party transactions that happened prior to year-end is discovered.

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership equity.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a specific point in time, showing assets, liabilities, and equity.

Book Value Per Share

The financial measure that indicates the per-share value of a company, calculated by dividing total equity minus preferred stock by the number of outstanding shares.

Liquidated

The process of converting assets into cash, usually in the context of dissolving a business or paying off debt.