Which one of the following would be the most effective procedure for discovering material Type II subsequent events?
A)Updating the search for unrecorded liabilities.
B)Resending all bank confirmations returned.
C)Reading of the minutes of board of directors' meetings.
D)Surprise cash count at random locations.

Question

Quizplus · Accepted Answer

Reading the minutes of the board of directors' meetings is the most effective procedure for discovering material Type II subsequent events. This is because the board of directors is responsible for making decisions that may affect the financial statements, and they are required to disclose any material subsequent events. Therefore, reviewing the minutes of the meetings can provide insight into any significant events that may have occurred after the reporting date. Updating the search for unrecorded liabilities and resending bank confirmations returned are procedures for discovering Type I subsequent events, which is events that occurred before the reporting date but were not known at the time of the financial statement preparation. A surprise cash count at random locations may uncover fraud or errors but is not specific to subsequent events.

Which One of the Following Would Be the Most Effective