Events occurring after year end

Question 1

Management should adjust the F/S

Answer 1

If creditors are relying on F/S where a material loss affects the audit report

Question 2

What requires footnote disclosure?

Answer 2

1) Subsequent Sales of LT Debt

Question 3

Auditor would promptly apply an omitted procedure if

Answer 3

it would impair his ability to support the previous opinion.

Question 4

What occurs prior the issuance of Financial Statements but subsequent to the Balance sheet date

Answer 4

Subsequent Events

Makes inquiries to management

Question 5

what would require disclosures in the financial statements

Answer 5

1) sigificant business events
2) Settlement of litigation
3) Proceeds of capital stock issuance

Question 6

Obtaining evidence of subsequent events would include

Answer 6

Comparing most recent interim F/S to F/S under Audit

Question 7

Difference between type 1 and 2 subsequent events. And the treatment.

Answer 7

Type 1 (recognized) - require adjustments to F/S.

Type 2 (non-recognized) - require disclosure to keep F/S from being misleading

Question 8

When does the Auditor render a Qualified or Adverse Opinion on the report.

Answer 8

When GAAP is violated