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

What responsibility does a CPA assume by dating the audit report after a subsequent event has been disclosed?

1. Responsibility for only the new event disclosed.

2. Responsibility for all subsequent events through the report date.

3. Responsibility for all events through the new report date.

4. No additional responsibility beyond what was audited.

The correct answer is: Responsibility for all events through the new report date.

When a CPA dates the audit report after a subsequent event has been disclosed, they assume responsibility for all events that have occurred through the new report date. This means that the auditor must ensure that any material events that occurred after the initial balance sheet date but before the date of the audit report are adequately disclosed in the financial statements. The importance of this responsibility lies in the auditor's duty to provide assurance that the financial statements are free from material misstatement, not only for the period under audit but also for subsequent events that may have an impact on the financial statements. By updating the report date, the CPA signals that they have reviewed any significant events and their effects on the financial statements as of the new report date, ensuring that users of the financial statements have relevant and timely information about the entity's condition. This comprehensive responsibility helps protect the interests of the financial statement users by ensuring that they are aware of any developments that could materially affect the company’s financial position or results of operations.