The following unrelated events occurred after the balance sheet date but before the audit report was prepared:

Question:

The following unrelated events occurred after the date but before the was prepared:
1. The granting of a retroactive pay increase
2. Declaration of a stock dividend
3. Sale of a fixed asset at a substantial profit
4. Determination by the federal government of additional income tax due for a prior year
5. Filing of an antitrust suit by the federal government

Required
a. Explain how each of the items might have come to the auditor's attention.
b. Discuss the auditor's responsibility to recognize each of these in connection with the report.*

Audit Report
The audit report is issued by a certified public accountant who is appointed by the shareholders to provide assurance upon the truth and fairness of the financial statements prepared by the managers of the company. Audit report contains the... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...