If a Subsequent Event That Has a Material Effect on ICFR

question 48

Multiple Choice

If a subsequent event that has a material effect on ICFR is discovered after the financial report date, but existed at year-end, the duty of the auditor is to:

• A) disclose the event in the audit report and issue a qualified opinion.
• B) disclose the event in the audit report and issue an adverse opinion on the ICFR.
• C) disclose the event in the audit report and add an explanatory paragraph.
• D) depending on the circumstances, the auditor may choose any of the above.

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Definitions:

Legal Rights

Refers to the entitlements granted by legal systems or societal norms to individuals or entities, encompassing freedoms, privileges, and protections under law.

Clearing

The process of reconciling purchases and sales of various options, futures, or securities, as well as the direct transfer of funds from one financial institution to another.

Refuse To Honor

The act of not accepting, acknowledging, or fulfilling an agreement, request, or instruction.

Enough Money

Implies having sufficient funds to meet needs, obligations, or desired goals without financial strain.