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Charlie and Keona are discussing the upcoming review of a client's subsequent events by their firm one day over lunch. Charlie, a recent hire,
Charlie and Keona are discussing the upcoming review of a client's subsequent events by their firm one day over lunch. Charlie, a recent hire, asks Keona to explain how this is typically handled by the audit firm. Which of the following is the most appropriate response to this question by Keona? O Our firm generally requests an official written document from senior management containing assurances that no subsequent events have occurred. O We typically perform substantive and analytical procedures on all the client's accounts as part of the audit, thus if any subsequent events existed, we would already be aware of them. O The subsequent events review is typically handled by the internal audit function. This is because the staff working in this function know the client better than we do. The determination of how to audit and review a client's subsequent events is a subjective one. The auditor often considers what they have learned about the client during risk assessment and may choose to scan post year-end journal entries and/or review the minutes of board of directors meetings.
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