ISA 560 (Redrafted) — Subsequent Events

ISA 560 (Redrafted) DEALS with the auditor’s responsibilities RELATING to subsequent events in an ‘Audit‘ of Financial Statements.

Table of Contents

ISA 560 (Redrafted) – Introduction
- 1. Scope of this ISA
- 2. Effective Date
ISA 560 – Objectives
ISA 560 – Definition
- 1. Subsequent Events
ISA 560 – Requirements
Synopsis

ISA 560 (Redrafted) – Introduction

1. Scope of this ISA

It does NOT deal with Matters relating to the auditor’s responsibilities for ‘Other Information’ obtained after the date of the auditor’s report which are addressed in ISA 720 (Revised).

2. Effective Date

This ISA is EFFECTIVE for audits of financial statements for periods beginning on or after December 15, 2009.

ISA 560 – Objectives

The Objectives of the ‘Auditor’ are:

To OBTAIN sufficient appropriate audit evidence about whether events occurring between the date of the financial statements and the date of the auditor’s report that Require adjustment of or disclosure in the ‘Financial Statements’; AND
To RESPOND appropriately to facts that become known to the auditor after the date of the auditor’s report.

ISA 560 – Definition

1. 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.

ISA 560 – Requirements

1. Events Occurring between the Date of the Financial Statements and the Date of the Auditor’s Report

The ‘Auditor’ shall PERFORM audit procedures about such events that Require adjustment of or disclosure in the ‘Financial Statements’.

The Auditor shall TAKE into account the auditor’s ‘risk assessment’ in determining the nature and extent of such audit procedures:

(a) Obtaining an understanding of any procedures Management has established to ensure that subsequent events are identified.

(b) Inquiring of Management and where appropriate those charged with governance as to any subsequent events that Might affect the ‘Financial Statements‘.

(d) Reading the entity’s latest subsequent Interim Financial Statements, if any.

1.1 Written Representations

The ‘Auditor’ shall REQUEST Management and where appropriate those charged with governance to provide a ‘Written Representation’ in accordance with ISA 580 that all events that require adjustment or disclosure have been adjusted or disclosed.

2. 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, the ‘Auditor’ shall:

DISCUSS with Management and where appropriate those charged with governance;
DETERMINE whether the Financial Statements Need Amendment and, if so; AND
INQUIRE how Management intends to address the Matter in the financial statements.

If Management Amends the Financial Statements, the Auditor shall:
(a) CARRY OUT the audit procedures necessary in the circumstances on the amendment.
(b) PROVIDE a ‘*New Auditor’s Report’ on the Amended financial statements*. The New auditor’s report shall NOT be dated earlier than the date of approval of the amended financial statements.

3. Facts Which Become Known to the Auditor After the Financial Statements Have Been Issued

The ‘Auditor’ has NO OBLIGATION to Perform any audit procedures regarding such financial statements.

However, the ‘Auditor’ shall:

DISCUSS with Management and where appropriate those charged with governance;
DETERMINE whether the ‘Financial Statements’ Need Amendment and, if so; AND
INQUIRE how Management intends to address the Matter in the financial statements.

If Management Amends the Financial Statements, the Auditor shall:
(a) CARRY OUT the audit procedures necessary in the circumstances on the amendment.
(b) REVIEW the steps taken by Management to ensure that anyone in receipt of the previously issued financial statements together with the auditor’s report thereon is INFORMED of the situation.
(c) PROVIDE a ‘New Auditor’s Report’ on the amended financial statements.