[evelynku]

Hey, guys. I am currently working on the Becker Ch1 simulation number 6. I have hard time to understand the subsequent event in this question, especially the second section.

Background: Cosenzo LLP is auditing the year 1 financial records of Pecoraro LLC, a publicly traded manufacturing company. Pecoraro has a December 31 year-end. Cosines performed their year-end audit during jan and Feb of Year 2. The financial statements were issued on March 15, Year 2, the date of audit report.

Event: 1. There was a $1,000,000 account receivable that was included Pecoraro’s December 31 financial statements that was written off in early February, Year 2 due to the customer filing bankruptcy. (Recognized subsequent event)

2. A material amount of inventory at a remote warehouse location was not counted by the client as of December 31, Year 2. (Not a subsequent event)

3. Several material transactions were not recorded in the financial records of Pecoraro as of December 31. These were uncovered during the audit. (Not a subsequent event)

Can any one help me to understand the event 1,2,and 3? Thank you so so so much.