[The following paragraph was effective for reviews of interim periods within fiscal years beginning before December 15, 2014. See PCAOB Release No. 2014-002 for reviews of interim periods within fiscal years beginning on or after December 15, 2014, or return to the current version.]


B1. The following are examples of situations about which the accountant would ordinarily inquire of management:

  • Business combinations
  • New or complex revenue recognition methods
  • Impairment of assets
  • Disposal of a segment of a business
  • Use of derivative instruments and hedging activities
  • Sales and transfers that may call into question the classification of investments in securities, including management's intent and ability with respect to the remaining securities classified as held to maturity
  • Computation of earnings per share in a complex capital structure
  • Adoption of new stock compensation plans or changes to existing plans
  • Restructuring charges taken in the current and prior quarters
  • Significant, unusual, or infrequently occurring transactions
  • Changes in litigation or contingencies
  • Changes in major contracts with customers or suppliers
  • Application of new accounting principles
  • Changes in accounting principles or the methods of applying them
  • Trends and developments affecting accounting estimates, fn 36 such as allowances for bad debts and excess or obsolete inventories, provisions for warranties and employee benefits, and realization of unearned income and deferred charges
  • Compliance with debt covenants
  • Changes in related parties or significant new related-party transactions
  • Material off-balance-sheet transactions, special-purpose entities, and other equity investments
  • Unique terms for debt or capital stock that could affect classification