If information discovered after the reporting date provides evidence about a condition that already existed at that date, the auditor should generally consider whether the financial statements need:
Correct answer: B. Adjustment for that condition
- A. Deletion of all prior-year figures
- B. Adjustment for that condition
- C. Conversion to cash accounting
- D. Removal of the audit opinion
Explanation
A subsequent event that confirms a condition existing at the reporting date is usually an adjusting event. The accounts may need correction, whereas later conditions that arise after the reporting date are generally treated differently.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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