Which of the following procedures would an auditor most likely perform to obtain

Question

Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events? (Points : 2) Investigating changes in stockholders' equity balances occurring after year-end. Confirming bank accounts established after year-end. Inquiring of the entity's legal counsel concerning litigation, claims, and assessments arising after year-end. Recomputing a representative sample of large-dollar transactions occurring after year-end for arithmetic accuracy.

       Risk of misapplying auditing procedures.
       Assurance provided by substantive tests.
       Preliminary judgment about materiality levels.
       Risk of failing to discover material misstatements.

       Must prepare a written assessment of the entity’s internal control over financial reporting.
       Must evaluate the actual effectiveness of the entity’s internal control over financial reporting.
       Must support the evaluation of the entity’s internal control over financial reporting with sufficient documented evidence.
       Must provide a written plan each year for use in updating the entity’s internal control over financial reporting.

       Risk analysis.
       Ratio analysis.
       Regression analysis.
       Trend analysis.

       Assess the risk that a material misstatement could occur in a financial statement assertion.
       Understand the accounting principles of the industry in which the entity operates.
       Confirm with the entity's attorney that all material loss contingencies have been at least disclosed.
       Develop an appropriate audit program to determine whether the entity's financial statements are fairly presented.

The auditor’s assessed level of detection risk is inversely related to the: (Points : 2)

Explanation / Answer

       Risk of misapplying auditing procedures.

       Must support the evaluation of the entity’s internal control over financial reporting with sufficient documented evidence.

       Ratio analysis.

       Develop an appropriate audit program to determine whether the entity's financial statements are fairly presented.

The auditor’s assessed level of detection risk is inversely related to the:

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