56.Small and Tall, CPAs, completed the December 31, 2012 audit of Big Company on February 10, 2013. After the audit report release date, an outstanding lawsuit against Big Company was settled for materially more than recorded in the December 31, 2012 financial statements. The amount recorded in the financial statements represented the best estimate of management and the company's attorneys at the time the audit was completed. Based on this new information, Small and Tall, CPAs should A. Determine whether persons are currently relying on the auditors' reports.B. Advise the client to make appropriate changes in the financial statements and reissue them.C. Notify each member of the board of directors of Big Company.D. Take no action because the event took place after the audit report release date.
57.A partner of the accounting firm who has notbeen involved in the audit performs an engagement quality review of documentation. This review usually focuses on 58.An entity's income statements were misstated due to the recording of journal entries that involved debits and credits to an unusual combination of expense and revenue accounts. Auditors most likely could have detected this irregularity by 59.Following the audit report release date, auditors became aware of facts existing at the report date that would have affected the reports had auditors then been aware of such facts. What is the most appropriate initial course of action that auditors should take?
- Spring '12