Which of the following procedures would an auditor most likely perform to obtain evidence about an entity's subsequent events?
A) Reconcile bank activity for the month after the balance sheet date with cash activity reflected in the accounting records.
B) Obtain a letter from the entity's attorney describing any pending litigation, unasserted claims, and loss contingencies.
C) Review the treasurer's monthly reports on temporary investments owned, purchased, and sold.
D) Examine on a test basis the purchase invoices and receiving reports for several days after the inventory date.

Question

Quizplus · Accepted Answer

Obtaining a letter from the entity's attorney describing any pending litigation, unasserted claims, and loss contingencies is the most appropriate procedure to obtain evidence about subsequent events. This is because it provides information on events that occurred after the balance sheet date but may impact the financial statements. Choices A, C, and D pertain to procedures that would be performed to obtain evidence about transactions and events that occurred before the balance sheet date.

Which of the Following Procedures Would an Auditor Most Likely