When a subsequent event provides evidence about conditions that existed at the balance sheet date,the auditor should do which of the following?
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 auditor should ensure that the financial statements are adjusted to reflect the information obtained from the subsequent event, including any necessary footnote disclosures. This is based on the requirement of generally accepted auditing standards (GAAS) to make appropriate adjustments to the financial statements if new information is discovered. Assigning a specialist or shopping for an opinion is not relevant in this situation, and providing a new engagement letter is not necessary unless there is a significant change in the terms of the engagement.

When a Subsequent Event Provides Evidence About Conditions That Existed