inquiries or perform other procedures concerning the audited financial statements, unless
information, which existed at the report date and may affect the report, comes to the auditor's
attention. In this case the auditor would perform procedures to determine if the information
affects the report and is important to the external users. Choice "b" is incorrect. The auditor has
no obligation to perform other procedures if management of the entity requests the auditor to
reissue the auditor's report (if no significant changes have occurred since the report date).
Choice "c" is incorrect. The auditor has no obligation to perform other procedures if information
about an event that occurred after the date of the auditor's report comes to the auditor's
attention (and the auditor has not been asked to reissue the report). Choice "d" is incorrect.
Most contingencies are eventual y resolved; however, such resolution does not require the
auditor to perform other procedures.
QUESTION: 97
Which of the following procedures would an auditor most likely perform in obtaining evidence
about subsequent events?

A. Examine a sample of transactions that occurred since the year-end to verify the effectiveness
of computer controls.
B. Inquire of management whether there have been significant changes in working capital since
the year-end.
C. Recompute depreciation charges for plant assets sold for substantial gains since the year-
end.
D. Reperform the tests of controls that indicated significant deficiencies in the operation of
internal control.

Answer(s): B
Explanation:
Choice "b" is correct. In obtaining evidence about subsequent events, the auditor would most
likely inquire of management whether there have been significant changes in working capital
since year-end. Such changes could be indicative of a going concern problem, which would
require financial statement disclosure. Choice "a" is incorrect. Subsequent events are material
events or transactions occurring subsequent to the balance sheet date, but prior to the issuance
of the financial statements, that require adjustment to or disclosure in the financial statements.
Reviewing a sample of transactions occurring after year-end to verify the effectiveness of
computer controls would not be likely to provide information about subsequent events.
Choice "c" is incorrect. Subsequent events are material events or transactions occurring
subsequent to the balance sheet date, but prior to the issuance of the financial statements, that
require adjustment to or disclosure in the financial statements. Recomputing depreciation
related to assets sold after year-end is not likely to provide information about subsequent
events. Sales occurring after year-end are not considered to be subsequent events. Choice "d"
is incorrect. Subsequent events are material events or transactions occurring subsequent to the
balance sheet date, but prior to the issuance of the financial statements, that require adjustment
to or disclosure in the financial statements. Control deficiencies do not fall within this definition,
so reperforming tests of controls would not provide evidence about subsequent events.
QUESTION: 98
Which of the following events occurring after the issuance of an auditor's report most likely
would cause the auditor to make further inquiries about the previously issued financial
statements?

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