Auditors must be concerned with events that occur subsequent to the balance sheet date, because the...

Auditors must be concerned with events that occur subsequent to the balance sheet date, because the events may need to be reflected in the financial statements. a. Describe the two general types of subsequent events. (2 points) b. What is the auditors' responsibility with respect to detecting subsequent events? (2 points) c. Explain three audit procedures that are used by the auditors to search for subsequent events. (6 points)

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Expert Solution

(a)The two genreal types of subsequent events are as follows :

1. Those that provide evidence of condition that existed on the balance sheet date .

2. Those that provide evidence of condition that arose after the balance sheet date.

(b)

Responsibility of Auditor

The Auditor is required to perform audit procedures in order to obtain sufficient appropriate audit evidence that all the events occurring between the date of financial statements and date of audit report have been identified .

(C)

Three procedures used by auditors to search for subsequent events are :

1. Obtaining an understanding of whether there are any procedures management has established to ensure that subsequent events are identified.

2. Inquiring the management and those charged with governance as to whether any subsequent events have occurred which might affect the financial statements.

3. Reading the entity’s latest subsequent interim financial statements, if any.

ekkarill92 answered 1 year ago

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