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B. Bankruptcy of a customer who owes your client a material amount on open account at year end for which there is an inadequate allowance estimate.C. Sale of a large block of inventory at a price materially below carrying value.D.Signing of a letter-of-intent by the client to acquire 55% of another entity for stock.144. Which one of the following would be the most effective procedure for discovering material Type II subsequent events? A. Updating the search for unrecorded liabilities.B. Resending all bank confirmations returned.C.Reading of the minutes of board of directors' meetingsD. Surprise cash count at random locations.145. After completing the audit report of Blair Corporation, but before delivering the audit report to the client, a tornado demolished the main production facility. In this case, what option is available to the auditor other than dual dating the report? A. Use the original audit report date.B.Go back to the client's office and extend testing to the date of the tornado, thereby taking responsibility for all events up to the date of the tornado.C. Report the situation in the management representation letter.
D. Issue a scope limitation.146. When a subsequent event provides evidence about conditions that existed at the balance sheet date, what is the best course of action for the auditor to follow? A. Assign a specialist.B.Ensure that the financial statements are adjusted to reflect the information, including any necessary footnote disclosures.C. Shop for an opinion that fits the desired type of event.D. Provide management with a new engagement letter to document the terms of the revised arrangement.147. When a subsequent event provides evidence about conditions that did not exist at the balance sheet date, what is the best course of action for the auditor to follow? A.Ensure that any necessary footnote disclosures be included with the statements.B. Ensure that the financial statements are adjusted to reflect the information, including any necessary footnote disclosures.C. Give an inappropriate opinion.D. Provide management with a new engagement letter to document the terms of the revised arrangement.148. Which of the following is the best example of a Type I subsequent event? A. A related-party transaction occurs during the course of the audit.B. The company defaults on its line-of-credit with the bank subsequent to year end but previous to the release of the audit opinion.C.Litigation that was accrued as a liability in the year under audit is settled subsequent to year-end for an amount in excess of estimates.D. The company initiates an initial public offering subsequent to year-end.149. Which one of the following is notan example of an additional procedure that typically relates to the discovery of subsequent events? A.Partner review of all workpapers.