With respect to the auditor's planning of a year-end examination, which statement is always true?

• A. An engagement should not be accepted after the fiscal year ends
• B. An inventory count must be observed at the balance sheet date
• C. The client's audit committee should not be told of the specific audit procedures that will be performed
• D. It is an acceptable practice to carry out substantial parts of the examination at interim dates

Answer: (D)

In planning a year-end audit, it’s common and appropriate to perform substantial parts of the examination at interim dates. Doing important testing and substantive procedures before year-end helps the audit team understand controls, assess risk, and gather evidence efficiently. The key is that evidence obtained at interim remains usable, provided the auditor follows up with roll-forward procedures and final procedures after the year-end to address year-end facts and events. This approach is consistent with how audits are typically scheduled to balance thoroughness with practicality.

Other statements aren’t universally true. An engagement can be accepted around the year-end window, not strictly before it, so waiting until after the fiscal year ends isn’t a hard rule. Inventory counts aren’t required to occur exactly on the balance sheet date; counts can be performed before or after with appropriate procedures to reconcile to year-end balances. The audit committee is generally kept informed about the planned approach and significant procedures as part of governance communications, so saying they should not be told of specific procedures isn’t correct.