Following the audit report release date, auditors became aware of facts existing at the report date that would have affected the reports had auditors then been aware of such facts. What is the most appropriate initial course of action that auditors should take?
A)Determine whether there are persons relying or likely to rely on the financial statements who would attach importance to the information.
B)Request that management disclose the newly-discovered information by issuing revised financial statements.
C)Issue revised pro forma financial statements taking into consideration the newly discovered information.
D)Give public notice that auditors are no longer associated with financial statements.

Question

Quizplus · Accepted Answer

The initial course of action that auditors should take is to determine whether there are persons relying or likely to rely on the financial statements who would attach importance to the newly-discovered information. This is in keeping with the auditors' responsibility to consider the materiality and relevance of information to the financial statements and their users. The other options, such as requesting management to issue revised financial statements or giving public notice that auditors are no longer associated with the financial statements, may be necessary depending on the circumstances, but only after a thorough assessment of the impact of the newly-discovered information on the financial statements and their users. Issuing revised pro forma financial statements is not appropriate as it implies that the auditors have obtained additional audit evidence, which would not be the case in this situation.

Following the Audit Report Release Date, Auditors Became Aware of Facts