Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events?
A)Investigate changes in shareholders' equity occurring after year-end.
B)Recalculate a sample of large-dollar transactions occurring after year-end for arithmetic accuracy.
C)Confirm bank accounts established after year-end.
D)Inquire of the entity's solicitor concerning litigation, claims and assessments arising after year-end.

Question

Quizplus · Accepted Answer

To obtain evidence about the occurrence of subsequent events, the auditor would most likely inquire of the entity's solicitor concerning litigation, claims and assessments arising after year-end. This is because the solicitor is likely to be aware of any pending or threatened legal action against the entity, which could have an impact on the entity's financial statements. Other options, such as investigating changes in shareholders' equity or recalculating transactions, are not directly related to subsequent events and may not provide sufficient evidence in this regard. Confirming bank accounts established after year-end could be relevant in some cases but is not a standard procedure for obtaining evidence about subsequent events.

Which of the Following Procedures Would an Auditor Most Likely