Question

A. Griffin audited the financial statements of Dodger Magnificat Corporation for the year ended December 31, 2014. She completed gathering sufficient appropriate evidence on January 30 and later learned of a stock split voted by the board of directors on February 5. The financial statements were changed to reflect the split, and she now needs to dual date the report on the entity's financial statements. Which of the following is the proper form?

1) December 31, 2014, except as to Note X, which is dated January 30, 2015
2) January 30, 2015, except to note X which is dated February 5, 2015
3) December 31, 2014 except to Note X which is dated February 5, 2015
4) February 5, 2015 except for the date of the auditor's report, for which the date is January 30, 2015

Answer 1

The proper form for dual dating an auditor's report when a stock split occurs after the original report date but is included in the financial statements is 'January 30, 2015, except as to Note X, which is dated February 5, 2015'. This reflects the completion date of the audit and the specific date related to the stock split.

Step-by-step explanation:

When an auditor has completed an audit and dated their report, but then becomes aware of an event that occurred after that date which is reflected in the financial statements, they may dual date their report. This means the auditor's report will reflect one date for the overall audit, and a different, later date for the specific event or subsequent information that was not known at the time of the original audit report.

In the scenario presented, the correct form for dual dating due to a stock split that occurred after the auditor's report but was included in the financial statements would be: January 30, 2015, except as to Note X, which is dated February 5, 2015. This indicates that the auditor gathered sufficient appropriate evidence by January 30, but the note regarding the stock split, an event known later, is specifically dated on the day the stock split was voted on by the board of directors.