During the trial, Mary K. Cline, senior auditor for Deloitte, Haskins and Sells stated:“Well, we made a lot of judgments during the audit, and we were auditing the balance sheet asof May 31, and there was no reason in my judgment to look at this number after May 31.”6a. Should the oversale of lifetime partnerships be classified as a subsequent event?b. Should Deloitte have evaluated the sales occurring after the balance sheet date of May 31, 1984?c. Should L&H have been aware of the sales limits on lifetime memberships? If so, whatshould they have done about it?
During the trial, Mary K. Cline, senior auditor for Deloitte, Haskins and Sells stated:“Well, we made a lot of judgments during the audit, and we were auditing the balance sheet asof May 31, and there was no reason in my judgment to look at this number after May 31.”6a. Should the oversale of lifetime partnerships be classified as a subsequent event?b. Should Deloitte have evaluated the sales occurring after the balance sheet date of May 31, 1984?c. Should L&H have been aware of the sales limits on lifetime memberships? If so, whatshould they have done about it?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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During the trial, Mary K. Cline, senior auditor for Deloitte, Haskins and Sells stated:
“Well, we made a lot of judgments during the audit, and we were auditing the balance sheet as
of May 31, and there was no reason in my judgment to look at this number after May 31.”6
a. Should the oversale of lifetime
b. Should Deloitte have evaluated the sales occurring after the balance sheet date of May 31, 1984?
c. Should L&H have been aware of the sales limits on lifetime memberships? If so, what
should they have done about it?
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