The audit procedures for the subsequent events review can be divided into two categories: (1) procedures 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 1?
A) Inquiries of client regarding contingent liabilities.
B) Obtain a letter of representation written by client.
C) Subsequent period sales and purchases transactions are examined to determine whether the cutoff is accurate.
D) Review journals and ledgers of year 2 to determine the existence of any transaction related to year 1.

Question

Quizplus · Accepted Answer

Subsequent period sales and purchases transactions are examined to determine whether the cutoff is accurate. This is a procedure that is integrated as a part of the verification of year-end account balances. The cutoff accuracy ensures that transactions have been recorded in the appropriate period, and it is important for the accuracy of year-end balances.

The Audit Procedures for the Subsequent Events Review Can Be