Audit Ch 17

[17-22] 1) Reading the minutes of meetings of the board of directors, committees of the board and stockholders.

2) Reviewing contracts, loan agreements, leases, and correspondence from government agencies.

3) Reviewing tax returns, IRS reports, and schedules supporting the entity’s income tax liability

4) Confirming or otherwise documenting guarantees and letters of credit obtained from financial institutions or other lending agencies.

5) Inspecting other documents for possible guarantees or other similar arrangements

[17-24] a) Type 1: Events that provide additional evidence about conditions that existed at the date of the balance sheet and affect estimates that are part of the financial statement preparation process. Type one events require adjustment of financial statements

Type 2: Events that provide evidence about conditions that did not exist at the date of the balance sheet but that arose subsequent to that date. Type 2 events usually require disclosure in the notes to the financial statements.

b) Asking management about the following matters: (1) whether there were or are any substantial contingent liabilities or commitments existing at the balance sheet date or at the date of inquiry. (2) Whether there have been any significant changes in capital stock, long-term debt, or working capital; (3) the current status of any items in the financial statements that were accounted for based on preliminary or inconclusive data; and (4) whether any unusual adjustments have been made during the subsequent-events period.

Reading any interim financial statements that are available for the period after year-end comparing them to the prior- period statements; any unusual fluctuations are investigated.