A major customer of an entity suffers a fire after year-end, but just prior to completion of audit fieldwork. The entity believes that this event could have a significant direct effect on the financial statements. The auditor should
A) Advise management to disclose the event in the notes to the financial statements.
B) Disclose the event in the auditor's report.
C) Withhold submission of the auditor's report until the extent of the direct effect on the financial statements is known.
D) Advise management to adjust the financial statements.

Question

Quizplus · Accepted Answer

The auditor should advise management to disclose the event in the notes to the financial statements as it is a non-adjusting subsequent event that provides additional information about conditions that existed at the balance sheet date.

A Major Customer of an Entity Suffers a Fire After