Events Occurring After Year End

Question 1

What are Recognized (Type 1) Events?

Answer 1

Conditions existing on or before the balance sheet date

Question 2

What does Type 1 events require?

Answer 2

Financial statement adjustment

Question 3

What are Nonrecognized (Type II) Events?

Answer 3

Conditions existing after the balance sheet date

Question 4

What does Type II events require?

Answer 4

Footnote disclosure

Question 5

Does the auditor have active responsibility between the periods of the date of the financial statements and the date of the auditor’s report?

Answer 5

Yes

Question 6

What procedures should be performed when trying to identify subsequent events?

Answer 6

Post balance sheet transactions, Rep letter, Inquiry, Minutes, Examine latest interim financials

Question 7

The auditor doesn’t have active responsibility after the original report date except when?

Answer 7

Auditor becomes aware of information relating to subsequent events and consider whether its necessary for adjustments or disclosures.

Question 8

What options do an auditor have if adjustments or disclosures are made after original report date?

Answer 8

Dual date or extend date

Question 9

Does dual date or extend date extend responsibiliity for all subsequent events to the date?

Answer 9

Extend date

Question 10

What additional steps can be used to prevent further reliance on an auditor report if client refuses to follow procedures to make necessary changes?

Answer 10

Disassociate, Alert agencies, and Notify relying parties