What is a subsequent event based on PSA 560?
(e) Subsequent events – Events occurring between the date of the financial statements and the date of the auditor’s report, and facts that become known to the auditor after the date of the auditor’s report.
What needs to be disclosed as a subsequent event?
A company should disclose the date through which there has been an evaluation of subsequent events, as well as either the date when the financial statements were issued or when they were available to be issued. If so, disclose the nature of the event and an estimate of its financial effect.
What are the two types of subsequent events?
There are two types of subsequent events:
- Adjusting events. An event that provides additional information about pre-existing conditions that existed on the balance sheet date.
- Non-adjusting events. A subsequent event that provides new information about a condition that did not exist on the balance sheet date.
How do you find subsequent events?
However the following procedures are typical of a subsequent events review:
- Enquiring into management’s procedures/systems for the identification of subsequent events;
- Inspection of minutes of members’ and directors’ meetings;
- Reviewing accounting records including budgets, forecasts and interim information.
What is an adjusting event?
Adjusting event: An event after the reporting period that provides further evidence of conditions that existed at the end of the reporting period, including an event that indicates that the going concern assumption in relation to the whole or part of the enterprise is not appropriate. [
What period is covered by the auditor’s review for subsequent events?
There is a period after the balance-sheet date with which the auditor must be concerned in completing various phases of his audit. This period is known as the “subsequent period” and is considered to extend to the date of the auditor’s report.
What is an adjusting subsequent event?
There are two types of subsequent events. Adjusting events: provides additional information about an existing condition on the financial statements. Non-adjusting events: provides new information that is not linked to any condition on the financial statements.
What are considered subsequent events?
The definition of a subsequent events are generally defined as events that occurs after the year end period but before the financial statements have been issued. A subsequent event falls underneath the disclosure principle and can be confusing to many accountants that encounter them.
How do you find adjusting and non-adjusting events?
Adjusting events are those providing evidence of conditions existing at the end of the reporting period, whereas non-adjusting events are indicative of conditions arising after the reporting period (the latter being disclosed where material).
What are adjusting events examples?
Examples of adjusting events include: • events that indicate that the going concern assumption in relation to the whole or part of the entity is not appropriate; • settlements after reporting date of court cases that confirm the entity had a present obligation at reporting date; • receipt of information after reporting …
Which of the following is an example for adjusting events?
Other examples of adjusting events include: Sale of inventories at below cost indicates that the net realizable value was lower than the cost and that inventory was overstated as at the date of the financial statement . The resulting adjustment will reduce inventory value at the balance sheet date.
When do events occur as per SA 560?
AS per SA 560 Events Occurring Between the Date of the Financial Statements and the Date of the Auditor’s Report
What do you mean by subsequent events in Isa?
In this ISA, the term “subsequent events” is used to refer to both events occurring between the date of the financial statements and the date of the auditor’s report, and facts discovered after the date of the auditor’s report. 2. The auditor should consider the effect of subsequent events on the financial statements and on the auditor’s report.
What does the term subsequent events mean in SA?
In this SA, the term “subsequent events” is used to refer to significant events occurring between the balance sheet date and the date of the auditor’s report.
What does international standard on Auditing 560 mean?
International Standard on Auditing (ISA) 560, “Subsequent Events” should be read in conjunction with ISA 200, “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing.”