After the balance sheet date but prior to the audit report date the client decides to acquire Bargain Company to obtain a significant increase in revenues. The auditor would probably give a report that includes the statement: "except for the acquisition of Bargain Company..".

Question

Quizplus · Accepted Answer

The acquisition of Bargain Company after the balance sheet date is a subsequent event that does not affect the financial statements as of the balance sheet date. The auditor would not qualify the report with "except for" unless there was a material misstatement or lack of disclosure in the financial statements.

After the Balance Sheet Date but Prior to the Audit