ISA 560

SUBSEQUENT EVENT

SCOPE OBJECTIVE

Auditor’s responsibilities The objectives of the auditor are:

relating the subsequent event in (a) To obtain sufficient appropriate audit evidence
an audit of the financial about whether events occurring between the
statements. date of the financial statements and the date of
the auditor’s report that require adjustment of,
or disclosure in, the financial statements are
appropriately reflected in those financial
statements in accordance with the applicable
financial reporting framework; and
(b) To respond appropriately to facts that become
known to the auditor after the date of the
auditor’s report, that, had they been known to the
auditor at that date, may have caused the
auditor to amend the auditor’s report.

FIRST OBJECTIVE:EVENTS OCCURRING BETWEEN THE DATE OF THE FINANCIAL

STATEMENTS AND THE DATE OF THE AUDITOR’S REPORT

The auditor shall perform audit procedures designed to obtain sufficient appropriate audit evidence that all events
occurring between the date of the financial statements and the date of the auditor’s report or as near as practicable that
require adjustment of, or disclosure in, the financial statements have been identified.
The auditor is not, however, expected to perform additional audit procedures on matters to which previously applied
audit procedures have provided satisfactory for e.g. subsequent receipts, payments and subsequent sale. The auditor
shall take into account auditors risk assessment in determine N,T&E of such audit procedures.

Inquiring of management Reading minutes, if any, of

Obtaining an and, where appropriate, the meetings of the entity’s
understanding of any those charged with owners, management and those
Reading the entity’s latest
procedures management governance as to whether charged with governance that
subsequent interim financial
has established to ensure any subsequent events have been held after the date of
statements, if any.
that subsequent events are have occurred which the financial statements and
inquiring about matters .
identified. might affect the financial
statements discussed at any such
meetings for which minutes
are not yet available

The auditor shall request management and, where appropriate, those charged with governance, to provide a written representation
in accordance with ISA 5803 that all events occurring subsequent to the date of the financial statements and for which the
applicable financial reporting framework requires adjustment or disclosure have been adjusted or disclosed.
 Additional audit procedures or above procedures could not be performed.

Review or testing of Read the entity’s latest

accounting records or Where no subsequent Inquire, or extend
available budgets, cash previous oral or written
transactions interim and Minutes are flow forecasts and other
prepared – inspect inquiries, of the entity’s
occurring between related management legal counsel
the date of the available books and reports for periods after concerning litigation
financial statements records including bank the date of the financial and claims
and the date of the statements;
statement.
auditor’s report

Consider whether written

representations covering
particular subsequent
events may be necessary
to support other audit
evidence and thereby
obtain sufficient
appropriate audit evidence.

The auditor may inquire as to the current status of items that were accounted for on the basis of preliminary or inconclusive data
and may make specific inquiries about the following matters:
Whether new commitments, borrowings or guarantees have been entered into.
Whether sales or acquisitions of assets have occurred or are planned.
Whether there have been increases in capital or issuance of debt instruments, such as the issue of new shares or debentures, or
an agreement to merge or liquidate has been made or is planned.
Whether any assets have been appropriated by government or destroyed, for example, by fire or flood.
Whether there have been any developments regarding contingencies.
Whether any unusual accounting adjustments have been made or are contemplated.
Whether any events have occurred or are likely to occur that will bring into question the appropriateness of accounting policies
used in the financial statements, as would be the case, for example, if such events call into question the validity of the going
concern assumption.
Whether any events have occurred that are relevant to the measurement of estimates or provisions made in the financial
statements.
Whether any events have occurred that are relevant to the recoverability
of assets.
 RESULT OF PROCEDURE PERFORMED

If, as a result of the procedures performed as required, the auditor identifies events that require
adjustment of, or disclosure in, the financial statements, the auditor shall determine whether each such
event is appropriately reflected in those financial statements in accordance with the applicable financial
reporting framework

SECOND OBJECTIVE:FACTS WHICH BECOME KNOWN TO THE AUDITOR AFTER THE DATE OF
THE AUDITOR’S REPORT BUT BEFORE THE DATE THE FINANCIAL STATEMENTS ARE ISSUED

The auditor has no obligation to perform any audit procedures regarding the
financial statements after the date of the auditor’s report. However, if, after
the date of the auditor’s report but before the date the financial statements
are issued, a fact becomes known to the auditor that, had it been known to
the auditor at the date of the auditor’s report, may have caused the auditor to
amend the auditor’s report, the auditor shall.

Important note: As explained in ISA

210, the terms of the audit
Discuss the matter with Inquire how management engagement include the agreement of
Determine whether the
management and, where intends to address the management to inform the auditor of
financial statements need
appropriate, those charged matter in the financial facts that may affect the financial
amendment and, if so,
with governance statements statements, of which management
may become aware during the period
from the date of Audit report to the
date Fs are issued.

period from the date of the

auditor’s report to the date the
IF MANAGEMENT AMENDS THE FINANCIAL STATEMENTS, THE AUDITOR SHALL:
financial

statements are issued

Provide a new auditor’s

Carry out the audit report on the amended
procedures Extend the audit
procedures referred financial statements. The new
necessary in the auditor’s report shall not be
circumstances on above to the date of
the new auditor’s dated earlier than the date of
the amendment. approval of the amended
report; and
financial statements
 IF MANAGEMENT DOES NOT AMENDS THE FINANCIAL STATEMENTS, THE AUDITOR SHALL

Audit report provided

Yes No

Shall notify management and TCWG not to issue financial statement to third parties before Auditor shall
necessary amendments have been made. modify opinion
as required by
If FS are nevertheless subsequently issued without the necessary amendment, the auditor ISA 705 and
shall take appropriate action to seek to prevent reliance on auditors report. then provide
The auditor’s course of action to prevent reliance on the auditor’s report on the financial auditors report
statement depends upon the auditor’s legal rights and obligation. Consequently auditors may
consider it appropriate to seek legal advice

FACTS WHICH BECOME KNOWN TO THE AUDITOR AFTER THE FINANCIAL STATEMENTS HAVE
BEEN ISSUED:

After the financial statements have been issued, the auditor has no obligation to perform any audit
procedures regarding such financial statements. However, if, after the financial statements have been
issued, a fact becomes known to the auditor that, had it been known to the auditor at the date of the
auditor’s report, may have caused the auditor to amend the auditor’s report, the auditor shall:

Discuss the matter with management Determine whether the financial Inquire how management
and, where appropriate, those charged statements need amendment and, if so, intends to address the matter in
with governance the FS

IF MANAGEMENT AMENDS THE FINANCIAL STATEMENTS, THE AUDITOR SHALL:

Review the steps

Carry out taken by the
Extend the management to Provide a new The auditor shall include in the new or
the audit auditor’s report on the amended auditor’s report an Emphasis of
audit ensure that
procedures amended financial Matter paragraph or Other Matter paragraph
procedures anyone in receipt
necessary in referred of the previously statements. The new referring to a note to the financial statements that
the above to the issued FS auditor’s report shall more extensively discusses the reason for the
circumstanc date of the together with not be dated earlier than amendment of the previously issued financial
es on the new auditor’s the auditors the date of approval of statements and to the earlier report provided by
amendment. report report thereon is the amended financial the auditor
informed of the statements
situation
IF MANAGEMENT DOES NOT TAKE NECESSARY STEPS TO ENSURE THAT ANYONE IN RECEIPT OF
PREVIOUSLY ISSUED FS IS INFORMED OF THE SITUATION AND DOES NOT AMEND THE FS, THE AUDITOR
SHALL:
Notify management and those charged with governance, that the auditor will seek to prevent future reliance on the auditor’s
report. If, despite such notification, management or those charged with governance do not take these necessary steps, the
auditor shall take appropriate action to seek to prevent reliance on the auditor’s report.
The auditor’s course of action depends upon the auditor’s legal rights and obligations. Consequently, the auditor may
consider it appropriate to seek legal advice
30 June 30 Sep 03 Oct 09 Oct after FS issued

B/S date Approval date Date of Audit Fs Issued date

report No obligation to perform

Obtain SAAE no obligation to perform procedure procedure but facts

But facts known, if known at the DOAR known, if known at DOAR

Auditor may have amend AR Aud may have amend AR

By performing following (SEP): Discuss with M & TCWG Discuss with M & TCWG“

 Management process
 Inquiry whether fs needs amendment, if yes Fs needs amendment
 Reading minutes
 Latest interim FS Inquire how mgt address matter Inquire how Mgt amend
 Budget, cash flow forecast
 Legal counsel Management amend Management amend
 Written representation

Based on the above procedure Yes Yes

Auditor identify events that audit procedure on amendment audit procedure on amendment

Require adjustment or disclosure extend SEP to the date of new AR Review the steps by M to inform

In FS new AR – must not dated earlier anyone receipt of FS & R

Than DOA of Amended FS Extend SEP to the date of new AR

New AR- not dated earlier than

Request Management DoA of amended FS

Include EOMP or OMP – reason for

Agree Disagree Not amended amd in FS and previous AR

Not take step to inform anyone

amended receipt of previous FS & does

Modified accordingly AR not provided AR provided not amend FS

Check the adj / dis

Material Pervasive notify M & TCWG

Qualified Adverse not to issue FS to 3rd party Notify M and TCWG that

Auditor will seek to prevent

Future reliance on AR

If fs issued by M

If M or TCWG do not take

Seek legal advice to prevent reliance on AR

Necessary steps – seek LA