Question

AU-C 560 and AS 2905 state the first step when responding to subsequently discovered facts is to_______.

1) discuss the matter with the appropriate level of management and, if appropriate, those charged with governance
2) discuss the matter with the appropriate level of management rather than those charged with governance
3) issue a disclaimer of opinion, to avoid liability
4) immediately notify the board of directors, and request the internal audit function investigate accordingly

Answer 1

The first step when responding to subsequently discovered facts is to discuss the matter with the appropriate level of management and, if appropriate, those charged with governance.

Step-by-step explanation:

The correct answer is option 1) discuss the matter with the appropriate level of management and, if appropriate, those charged with governance. According to AU-C 560 and AS 2905, the first step when responding to subsequently discovered facts is to engage in discussion with the appropriate level of management and, if necessary, those charged with governance. This step ensures that the issue is properly addressed and appropriate actions can be taken.