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 first category?
A)Make inquiries of client regarding contingent liabilities.
B)Obtain a letter of representation written by client.
C)Examine subsequent period sales and purchases transactions to determine whether the cutoff is accurate.
D)Review the minute book to determine the existence of any transaction related to year 1.

Question

Quizplus · Accepted Answer

Examining subsequent period sales and purchases transactions to determine whether the cutoff is accurate is a procedure normally integrated as a part of the verification of year-end account balances. A cutoff test includes examining sales and purchases transactions occurring near the company's year-end to verify whether they have been recorded in the proper period. This procedure is essential in determining whether any such transactions should be included in the company's financial statements. Choices A, B, and D are procedures performed specifically for discovering subsequent events, not for verifying year-end account balances.

The Audit Procedures for the Subsequent Events Review Can Be