When Reviewing Subsequent Events, the Auditor Should

question 67

Multiple Choice

When reviewing subsequent events, the auditor should:

• A) treat ICFR events separate from financial statement events.
• B) review SEC correspondence with the client for evidence of any lapses in internal control.
• C) inquire of management as to any lapses in internal control.
• D) All of the above.

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Definitions:

Journal

A detailed record where all financial transactions of a business are initially recorded before being transferred to accounts in the general ledger.

Ledger

A comprehensive collection of all the accounts of a business, where transactions are recorded in a structured and detailed manner.

Income Statement

A financial statement that shows a company's revenue and expenses over a specific period, usually resulting in a net profit or loss.

Retained Earnings

The portion of net earnings not distributed to shareholders as dividends but retained by the company to be reinvested in its core business or to pay debt.