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

What could trigger an auditor to reassess audited financial statements after a report has been issued?

1. Management changes following the report's issuance.

2. Unresolved litigation that was previously disclosed.

3. Information that existed at the report date but was unknown.

4. General economic changes affecting the industry.

The correct answer is: Information that existed at the report date but was unknown.

The correct option highlights the importance of information that existed at the report date but was unknown at the time of the audit, which could significantly impact the financial statements. When such information comes to light after the auditor has issued their report, it may suggest that the financial statements were not fairly presented in accordance with the applicable financial reporting framework. For auditors, discovering information that existed prior to the issuance of the report and that affects the date of the audit is crucial. This type of information typically falls under the category of subsequent events, which require reassessment because it could lead to an incorrect portrayal of the entity's financial position or performance. If the newly discovered information is material, the auditor may need to take corrective actions, such as revising the report or issuing a new report that reflects the updated situation. The other options, while they may indicate changes or issues, do not directly trigger a reassessment of the previously issued audited financial statements in the same definitive manner. Changes in management or unresolved litigation may influence stakeholder perceptions or require additional disclosures but do not independently necessitate a reassessment of the audited financials. Similarly, general economic changes impact firms in various ways but do not translate to a direct effect on the reasonableness of the financial statements for the