The audit procedures for the subsequent events review can be divided into two categories: (1) procedures normally integrated as a part of the verification of year- end account balances and (2) those performed specifically for the purpose of discovering subsequent events. Which of the following procedures is in category 2?
A) Correspond with legal counsel.
B) Compare the subsequent- period purchase price of inventory with the recorded cost as a test of lower- of- cost- or- market valuation.
C) Examine subsequent period sales and purchases transactions to determine whether the cutoff is accurate.
D) Test the collectibility of accounts receivable by reviewing subsequent period cash receipts.

Question

Quizplus · Accepted Answer

Corresponding with legal counsel is performed specifically for the purpose of discovering subsequent events, and is therefore in category 2. The other options are procedures normally integrated as part of year-end balance verification.

The Audit Procedures for the Subsequent Events Review Can Be