Company a Hired Q to Perform Its Year-End Audit

question 18

Multiple Choice

Company A hired Q to perform its year-end audit. Subsequent to year-end, A discovers that one of its customers, who owes Company A a material amount, has filed for bankruptcy protection. Assume that Q completed the audit work prior to the date of bankruptcy filing but has not yet issued the audit report. In this case, Q should:

• A) ignore the event since it does not apply to the current year under audit.
• B) notify those individuals known to be relying on its work of the bankruptcy.
• C) perform additional work, as deemed necessary given the circumstances.
• D) None of the above.

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Definitions:

Organizational Change

The process through which a company or other entity alters its structures, strategies, operational methods, technologies, or organizational culture.

Continuous

Something that occurs in an unbroken or consistent manner over time, often without stopping or interruption.

Episodic

Pertaining to events or experiences that are distinct, separate, and often isolated in time, resembling episodes.

Organizational Development

is a planned, organization-wide effort to increase an organization's effectiveness and viability through interventions in its processes.