Question
You and your staff have completed an audit of a nonissuer for the calendar year ended December 31, Year 2. The audit report date of
You and your staff have completed an audit ofa nonissuerfor the calendar year ended December 31, Year 2. The audit report date of the financial statements was March 11, Year 3 and on March 26, Year 3, the client issued the financial statements.
On April 15, Year 3, as you are ascertaining that the workpapers and related audit programs are complete and properly signed off, you notice that the financial statements include a material misstatement subsequent to the issuance of an unmodified report. The misstatement was determined to be the inclusion of material nonexistent sales.Information regarding nonexistent sales was not known at the date of the audit report. The auditors find the subsequently discovered information is both reliable and existed at the date of the auditor's report. The team determines that the inclusion of the material nonexistent sales would have affected the audit report. The audit team believes there are persons currently relying on, or likely to rely on, the financial statements. Is the auditor's responsibility with respect to the nonexistent sales different if the auditor has resigned or been discharged prior to undertaking or completing the investigation than if he were the continuing auditor?
Please answer this question byresearching and citing related auditing standards.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started