Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

Which auditor procedure is likely used to assess subsequent events related to unusual adjustments after year-end?

1. Inquiring about accounting personnel changes.

2. Confirming material accounts receivable established after year-end.

3. Comparing current financial statements with prior periods.

4. Inquiring about any unusual adjustments made after year-end.

The correct answer is: Inquiring about any unusual adjustments made after year-end.

The correct procedure to assess subsequent events related to unusual adjustments after year-end involves inquiring about any unusual adjustments made after year-end. This approach directly targets unusual transactions or changes that might have occurred following the close of the financial statements, which auditors need to evaluate for their potential impact on the financial validity and accuracy of the year-end reports. In this context, the auditor's inquiry serves as a means to gather information about adjustments that may not have been reflected in the financial statements but could influence the overall presentation of the company’s financial position or results. These inquiries can provide insight into the reasons for any unusual adjustments, the nature of the events that led to those adjustments, and whether they might indicate underlying issues that warrant further investigation. Other options, while potentially relevant in different contexts, do not specifically address the need to evaluate unusual adjustments after year-end. For instance, inquiring about accounting personnel changes might provide useful information about the stability of the finance team, but it does not directly assess adjustments. Confirming material accounts receivable established post-year-end could help in understanding financial positions but does not focus on unusual adjustments. Lastly, comparing current financial statements with prior periods can reveal trends and anomalies but would not necessarily identify specific adjustments made after year-end. Thus,