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 the second category?
A) Compare the subsequent-period purchase price of inventory with the recorded cost as a test of lower-of-cost-or-market valuation.
B) Test the collectability of accounts receivable by reviewing subsequent period cash receipts.
C) Examine subsequent period sales and purchases transactions to determine whether the cutoff is accurate.
D) Correspond with legal counsel.

Question

Quizplus · Accepted Answer

Corresponding with legal counsel would fall under the category of audit procedures performed specifically for the purpose of discovering subsequent events. Legal counsel may be able to provide information on pending litigation or other legal matters that could affect the financial statements. Choices A, B, and C are procedures that are typically integrated as a part of the verification of year-end account balances and would not necessarily reveal subsequent events.

The Audit Procedures for the Subsequent Events Review Can Be