When a subsequent event provides evidence about conditions that existed at the balance sheet date,what is the best course of action for the auditor to follow?
A)Assign a specialist.
B)Ensure that the financial statements are adjusted to reflect the information,including any necessary footnote disclosures.
C)Shop for an opinion that fits the desired type of event.
D)Provide management with a new engagement letter to document the terms of the revised arrangement.

Question

Quizplus · Accepted Answer

The best course of action for the auditor is to ensure that the financial statements are adjusted to reflect the information obtained from the subsequent event, including any necessary footnote disclosures. This will ensure that the financial statements are fairly stated and in compliance with the applicable accounting standards. The other options, such as assigning a specialist, shopping for an opinion, or providing a new engagement letter, may not be relevant or appropriate based on the specific circumstances of the subsequent event.

When a Subsequent Event Provides Evidence About Conditions That Existed