Assume that Rory is auditing the financial statements of Augusta, Inc. Rory completes his fieldwork on February 25 and his report (along with Augusta's financial statements) is issued on March 1. On March 3, a hurricane destroys a warehouse that contains a significant amount of uninsured inventory. Which of the following best describes Rory's responsibility with respect to the effects of this hurricane on Augusta's financial statements?
A)Because the inventory was included in the financial statements audited by Rory, he is required to perform additional procedures and reissue his report on the revised financial statements.
B)Because the hurricane occurred after the date of Rory's report, he has no responsibility to perform additional procedures or reissue his report.
C)Because the hurricane occurred prior to the next fiscal quarter, Rory is required to perform additional procedures and reissue his report on the revised financial statements.
D)Because the hurricane occurred after the release of the financial statements and Rory's report, he has no responsibility to perform additional procedures or reissue his report.

Question

Quizplus · Accepted Answer

Rory has no responsibility to perform additional procedures or reissue his report because the hurricane occurred after the release of the financial statements and Rory's report. The event occurred after the audit was completed, and therefore, the financial statements were accurate at the time they were audited and issued. Augusta should adjust their financial statements and provide disclosure of the event in their subsequent filings.

Assume That Rory Is Auditing the Financial Statements of Augusta