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:

Hypothetical Syllogism

A form of logical argument involving two conditional statements and a conclusion derived from them.

Modus Ponens

A form of logical argument where if a conditional statement ("if P then Q") is accepted, and the antecedent (P) holds, then the consequent (Q) can be concluded.

Inductive Generalization

A form of reasoning where a conclusion is drawn about all members of a group based on observations of a sample of that group.

Sodium

A chemical element with the symbol Na and atomic number 11, which is a soft, silvery-white, highly reactive metal and is found in many salts, including table salt.