The audit procedures for the subsequent events review can be divided into two categories: 1)procedures normally integrated as a part of the verification of year-end account balances,and 2)those performed specifically for the purpose of discovering subsequent events.Which of the following procedures would be in the second category?
A)Examine subsequent-period sales and purchases transactions to determine whether the cutoff is accurate.
B)Correspond with lawyers.
C)Test the collectability of accounts receivable by reviewing subsequent period cash receipts.
D)Compare the subsequent period purchase price of inventory with the recorded cost as a test of lower-of-cost-or-market valuation.

Question

Quizplus · Accepted Answer

Corresponding with lawyers is a procedure specifically performed to discover subsequent events, such as lawsuits or claims, that may have a material impact on the financial statements. The other options listed are procedures normally integrated as part of the verification of year-end account balances.

The Audit Procedures for the Subsequent Events Review Can Be