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O The determination of how to audit and review a client's subsequent events is a subjective one. The auditor often considers

O The determination of how to audit and review a client's subsequent events is a subjective one. The auditor often considers

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Charlie and Keona are discussing the upcoming review of a client's subsequent events by their firm one day over lunch. Charlie, a recent hire, asks Keona to explain how this is typically handled by the audit firm. Which of the following is the most appropriate response to this question by Keona? O Our firm generally requests an official written document from senior management containing assurances that no subsetuent events have occurred. O We typically perform substantive and analytical procedures on all the client's accounts as part of the audit, thus if any subsequent events existed, we would already be aware of them. O The subsequent events review is typically handled by the internal audit function. This is because the staff working in this function know the client better than we do. O The determination of how to audit and review a client's subsequent events is a subjective one. The auditor often considers what they have learned about the client during risk assessment and may choose to scan post year-end journal entries and/or review the minutes of board of directors meetings.
Transcribed Image Text:Charlie and Keona are discussing the upcoming review of a client's subsequent events by their firm one day over lunch. Charlie, a recent hire, asks Keona to explain how this is typically handled by the audit firm. Which of the following is the most appropriate response to this question by Keona? O Our firm generally requests an official written document from senior management containing assurances that no subsetuent events have occurred. O We typically perform substantive and analytical procedures on all the client's accounts as part of the audit, thus if any subsequent events existed, we would already be aware of them. O The subsequent events review is typically handled by the internal audit function. This is because the staff working in this function know the client better than we do. O The determination of how to audit and review a client's subsequent events is a subjective one. The auditor often considers what they have learned about the client during risk assessment and may choose to scan post year-end journal entries and/or review the minutes of board of directors meetings.
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