Focus Notes # 8

PAS 560
SUBSEQUENT EVENTS

DEFINITIONS:

o Date of the financial statements:

- The date at the end of the latest period covered by the financial statements.
- Normally the date subject to audit.
o Date of Approval of the financial statements:
- The date on which those with the recognized authority assert that they have prepared the
entity’s complete set of financial statements, including the related notes and that they have
taken responsibility for them.
o Date of the Auditor’s Report:
- The date selected by the auditors to date the report on the financial statements.
- Auditor’s report is not dated earlier than the date on which the auditor has obtained
sufficient appropriate audit evidence on which to base the opinion on the financial
statements
o Date the Financial Statements are issued:
- The date that the auditor’s report and audited financial statements are made available to
third parties.

SUBSEQUENT EVENTS:
o 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.
o Auditor should consider the effect pf subsequent events on the financial statements and on the
auditor’s report.

EVENTS AFTER THE BALANCE SHEET DATE (PAS 10):

o Deals with the treatment in the FS of events, both favorable and unfavorable.
o 2 types of events: those that provide evidence of conditions that existed at the date of FS
those that are indicative of conditions that arose after the date of FS

EVENTS OCCURING UP TO THE DATE OF THE AUDITOR’S REPORT:

o The auditor should perform procedures designed to obtain sufficient appropriate audit evidence
that all evidence up to the date of the auditor’s report in the financial statements have been
identified.
o However, auditor is not expected to conduct a continuing review of all matters to which previously
applied procedures have provided satisfactory conclusions.
o Procedures to identify events:
 Reviewing procedures management ( to ensure subsequent events are identified)
  Reading minutes of meeting of shareholders, BOD and audit and executive committees held
after the date of the FS.
 Reading the entity’s latest available interim FS.
 Inquiring entity’s lawyers concerning litigations and claims.
 Inquiring of management on specific matters:
- current status of items for on the basis of preliminary or inconclusive data
- new commitments entered into
- whether sales of asset have occurred
- issue of new shares
- appropriated assets
- risk areas and contingencies
- unusual accounting adjustments made

FACTS DISCOVERED AFTER THE DATE OF THE AUDITOR’S REPORT BUT BEFORE THE DATE
OF FINANCIAL STATEMENTS ARE ISSUED:
o After the date of the auditor’s report = auditor does not have any responsibility to perform
procedures regarding the FS.
o Auditors become aware of a fact which may materially affect the FS, whether FS needs
amendment.
o New auditor’s report would be dated not earlier than the date of approval of the amended FS.

FACTS DISCOVERED AFTER THE FS HAVE BEEN ISSUED:

o After FS have been issued, the auditor has no obligation to make any inquiry regarding FS.

OFFERING OF SECURITIES TO THE PUBLIC:

o Auditor should consider any legal and related requirements applicable to the auditor in all
jurisdictions in which the securities are being offered.