Question

Subsequent events for which the auditor has a responsibility to actively search are defined as events that occur subsequent to the?

1) balance sheet date.
2) date of the auditor's report.
3) balance sheet date but prior to the date of the auditor's report.
4) date of the auditor's report and concern contingencies that are not reflected in the financial statements.

Answer 1

It encompasses events occurring between the balance sheet date and the date of the auditor's report, ensuring that any material changes during this period are appropriately considered in the financial statements. Thus, the correct answer is option 3) balance sheet date but prior to the date of the auditor's report.

Step-by-step explanation:

Subsequent events that the auditor actively searches for are events occurring between the balance sheet date and the date of the auditor's report. These events are important as they may provide additional information about conditions that existed at the balance sheet date.

The auditor needs to ensure that any material events occurring during this period are appropriately reflected in the financial statements.

Thus, the correct answer is option 3) balance sheet date but prior to the date of the auditor's report.