Company a Hired Q to Perform Its Year-End Audit

question 33

Multiple Choice

Company A hired Q to perform its year-end audit. Subsequent to the completion of field work, but prior to the issuance of the financial statements, A discovers that one of its customers has filed for bankruptcy protection. Assume that Q decides to perform additional work to determine the affect of the bankrupt customer on A's financial statements, then Q:

• A) should issue a dual-dated report.
• B) should expand the testing procedures and wrap-up work in order to extend the report date.
• C) amend the financial statements with a footnote and issue the audit report as planned.
• D) Either "a" or "b" depending on the amount of additional testing performed.

---

Definitions:

Ultra Vires Act

Actions conducted by a corporation's management or board that are beyond the scope of its powers as defined by its charter or the law.

Express and Implied Powers

Authorities of a governmental or organizational body that are explicitly stated (express) or inferred through conduct (implied).

Ultra Vires

Acts or decisions made by an entity that are beyond the scope of powers granted by its constitution or laws.

Articles of Incorporation

Legal document filed with a governmental entity to legally establish a corporation.