A Client Acquires a Company on January 12, 20X1 While

question 68

Multiple Choice

A client acquires a company on January 12, 20X1 while its auditor is preparing the audit report for 20X0. Plans for this acquisition began in late December, 20X0, although the auditor was unaware of them. GAAS requires the auditor to:

• A) include the purchase transaction in its audit work.
• B) include the purchase transaction in the footnotes.
• C) disclose the purchase transaction in the audit report.
• D) depending on the circumstances, the auditor may choose any of the above.

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Definitions:

Critical Life Event

A significant occurrence that has a profound impact on an individual's life and perspective.

Balanced Processing

Involves objectively analyzing and evaluating relevant information before making a decision, ensuring a fair and unbiased approach.

Optimism

The inclination to look at the more favorable side of events or conditions and to expect the most favorable outcome.

Positive Psychological Attribute

Characteristics or traits of an individual that are beneficial for their mental health and well-being, such as optimism, resilience, and self-efficacy.