Which of the following is true about notifying individuals of subsequent events?

The correct answer is that the auditor must use judgment to determine the necessity of notification regarding subsequent events. This reflects the inherent professional responsibility of an auditor to assess the significance of events that occur after the reporting period but before the financial statements are issued.

Subsequent events can have a significant impact on the understandability and reliability of the financial statements. Therefore, the auditor evaluates these events to determine whether they require disclosure in the financial statements or whether the users of the statements need to be informed. Factors influencing this judgment include the nature of the event, its timing, and its potential impact on the financial statements.

This decision-making process ensures that stakeholders receive relevant information that could affect their understanding of the organization's financial position. Thus, it underscores the importance of the auditor's professional judgment in safeguarding the interests of those relying on the financial statements.