The audit procedures for the subsequent events review can be divided into two categories: (1)procedures 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 is in the first category?
A)Inquire of client regarding contingent liabilities.
B)Obtain a letter of representation written by client.
C)Subsequent period sales and purchases transactions are examined to determine whether the cutoff is accurate.
D)Review journals and ledgers of year 2 to determine the existence of any transactions related to year 1.

Question

Quizplus · Accepted Answer

Procedure C is integrated into the verification of year-end balances and involves examining subsequent period transactions to ensure the accuracy of the year-end cutoff. The other options, A, B, and D, involve specifically identifying and reviewing subsequent events and are therefore in the second category of audit procedures.

The Audit Procedures for the Subsequent Events Review Can Be