? 1.4 Audit procedures to test subsequent events
Inquiries of management | ? Status of items accounted for using preliminary or inconclusive data. ? Whether there are any new commitments, borrowings or guarantees. ? Whether there have been any: ? Sales or destruction of assets. ? Issues of shares/debentures or changes in business structure. ? Major events affecting appropriateness of accounting policies for estimates. ? Litigations or claims. |
Other procedures | ? Review management procedures for identifying subsequent events to ensure that such events are identified. ? Read minutes of general board/committee meetings and enquire about unusual items. ? Review latest available interim FS and budgets, cash flow forecasts and other management reports. ? Obtain evidence of any litigation or claims from the company’s solicitors with client permission. ? Obtain written presentation that all events occurring subsequent to the period-end which need adjustment or disclosure have been adjusted or disclosed. |
Facts discovered after the date of the auditor’s report but before the FS are issued
? The FS are responsibility of the management.
? The management should inform the auditors of any material subsequent events between the date of the auditors’ report and the date the FS are issued.
? The auditor does not have any obligation:
? To perform procedures.
? Make enquiries regarding the FS, after the date of the report.
? If the auditor become aware of a fact that had it been known to the auditor at the date of the report may have caused the auditor to amend the auditor’s report, the auditor shall:
? Discuss the matter with management and those charged with governance.
? Determine whether the FS need amendment.
? If amendment is required, inquire how management intends to address the matter in the FS.
1.4.1 If amendment is required and management makes the necessary changes
? The auditor must carry out the following procedures:
? Undertake any necessary audit procedures on the changes made.
? Extend audit procedures for identifying subsequent events that may require adjustment of or disclosure in the FS to the date of the new auditor’s report.
? Provide a new auditor’s report on the amended FS.
1.4.2 If amendment is required and management does not amend the FS
? If the auditor’s report has not yet been provided to the entity:
? The auditor shall modify the opinion and then provide the auditor’s report.
? If the auditor’s report has already been provided to the entity,
? The auditor shall notify management and those charged with governance not to issue the FS before the amendments are made.
? If the FS are issued anyway, the auditor shall take action to seek to prevent reliance on the auditor’s report.
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