Lesson: Subsequent Events Practice Questions

Instructor: Nick Palazzolo

In this lesson, various multiple-choice questions regarding subsequent events are explored and discussed. Different scenarios are analyzed to determine how an auditor should approach them in the context of subsequent events and their implications on financial statements. The lesson also delves into the proper way to dual date an audit report and highlights considerations regarding management revisions to the financial statements. Additionally, the lesson focuses on understanding the significance and possible requests for clarification stemming from statements in a client's lawyer's letter concerning litigation, claims, and assessments.

Updated: June 22, 2023 Create an account

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Recommended Lessons

Subsequent Events Overview

Subsequent Events Objectives

Introduction to Subsequent Events

Auditor's Responsibility for Subsequent Events

Examples of Subsequent Events

Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Let's knock out some multiple choice questions on what I think is a pretty interesting, fun topic, right? Aren't they all fun and interesting? This one particularly fun and interesting here, subsequent events. If a subsequent event occurs after the report date, but prior to the release date of an audit report, resulting in management's revision of the financial statements of a non-issuer, always take note, is this important? Is the fact that it's a non-issuer important? In some questions it will be, in some questions it won't. Then the auditor may do any of the following except. Let's think about this question. Let's think about the implications of it. Let's think about what could be relevant. We know when it comes to subsequent events, we have different dates regarding evaluation dates, if you're an issuer or a non-issuer. However, I don't think that's going to play a role here. Let's take a look what our options are. Well, we've got concepts of dual dating. We could possibly see that here. Let's see what we've got. Well, we could perform, let's say, perform audit procedures necessary to obtain assurance about the revised financial statements. Okay. That's something we can do regardless if it's a issuer or non-issuer. If we want to get assurance over this additional time period that was added because what happened, we have a subsequent event happens after the report date, before the release of the audit report. So management revised the financial statements and because they did that, right, their new financial statements and you need to now do work over whatever was revised. But we actually can perform audit procedures necessary to obtain this assurance. That's just more work. Now, you may want to dual date the report, do something like that. We are going

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Engagement Planning, Understanding an Entity, & Understanding its Internal Control

Module: 2 Concepts, 36 Lessons

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Management's Responsibility for Disclosing Related Parties, Going Concern, Litigation, Estimates, & More Objectives

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Introduction to Management's Representation and Responsibility

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