Question
A major procedure auditors rely on for evaluating known litigation and claims against a client is: A examination of documents supporting cash disbursements after the
- A major procedure auditors rely on for evaluating known litigation and claims against a client is:
A | examination of documents supporting cash disbursements after the end of the client's fiscal year | |
B | confirmation with parties who have sued the client | |
C | inquiry of the client's attorneys | |
D | inquiry of the chief executive officer |
2. To identify possible contingent liabilities, the auditor usually will:
A | consider whether information obtained in other audit areas indicate the possibility of a contingent liability | |
B | review internal revenue agent reports | |
C | review minutes of the board of directors and audit committee | |
D | perform all of the above procedures |
3. Subsequent events that require adjustment in the financial statements include:
A | a lawsuit filed during the subsequent period against the company | |
B | settlement of a multi-year regulatory investigation by paying a fine in an amount different than what is recorded in the financial statements | |
C | a decline in the fair value of securities held for resale | |
D | the uninsured loss of inventories as a result of fire |
Please answer each multiple choice question.
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