16-31&32

6 31. The auditor's opinion on the faimess of financial statements may be affected b events Define what is commonly referred to in auditing as a subsequent event, and de two general types of subsequent events. a. scribe the b. Identify those auditing procedures that the auditor should apply at or near the completim of fieldwork to disclose significant subsequent events 7 16-32 Linda Reeves, CPA, receives a telephone call from her client, Lane Company. The compuny's controller states that the board of directors of Lane has entered into two contractual arrange ments with Ted Forbes, the company's former president, who has recently retired. Under one agreement, Lane Company will pay the ex-president $7,000 per month for five years if he does not compete with the company during that time in a rival business.U agreement, the company will pay the ex-president $5,000 per month for fiv advisory services as the company may request from the ex-president. e years for such agreements Lane's controller asks Reeves whether the balance sheet as of the date the two were signed should show $144,000 in current liabilities and $576,000 in long-term liahilities,. whether the two agreements should be disclosed in a contingencies note to the financial statements Ine Kealey has accumulated known asd How should Linda Reeves reply to the controller's questions? Explain