What is the auditors responsibility on the events after the date of the report?
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Subsequent EventsManagements' responsibilitiesManagement are responsible for preparing the financial statements in accordance with the relevant financial reporting framework. IAS 10 Events After the Reporting Period requires management to consider the impact of events that occur after the year-end on the financial statements. It categorises those events as either:
The auditors' responsibilitiesISA 560 Subsequent Events details the responsibilities of the auditors with respect to subsequent events and the procedures they can use. It identifies two periods of relevance: Up to the date of the audit reportUntil this point the auditor must perform procedures to identify events that need to be either adjusted or disclosed in the financial statements. Between the date of the audit report and publishing the accountsDuring this period the auditor need not perform procedures but, if they identify any adjustments or disclosures that need to be made in the financial statements they must take appropriate action. This will normally be in the form of requesting that the directors amend the financial statements and then reissuing the audit report. If the directors refuse then the auditor has the right to communicate the known misstatements to the shareholders at the annual general meeting. The auditor may also consider resigning and issuing a statement of circumstance. ProceduresThe nature of procedures performed in a subsequent events review depends on many variables, such as the nature of transactions and events and the availability of data and reports. However the following procedures are typical of a subsequent events review:
If, after the financial statements have been issued, management amends the financial statements, the auditor shall:
What is the auditor's responsibility on the events after the issuance of the financial statements?The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud.
What are events after the reporting date?Events after the reporting date are all events, both favorable and unfavorable, that occur between the reporting date and the date when the financial statements are authorized for issue, even if those events occur after the publication of an announcement of the surplus or deficit, the authorization of the financial ...
Why is the date of the auditor's report important?It is important that the auditor's report include this date because it informs the reader that the auditor has considered the effect on the financial statements and on the report of events and transactions of which the auditor became aware and that occurred up to that date.
What is the auditors responsibility with respect to detecting subsequent events?The auditor is required to discuss with management how they intend to deal with events that will require the financial statements to be amended after the auditors have signed their report, but before the financial statements are issued.
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