FAQ on SA 560 – Subsequent Events | Part 1
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- 2 Min Read
- By Taxmann
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- Last Updated on 6 June, 2023
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SA 560 deals with the auditor’s responsibilities relating to subsequent events in an audit of financial statements. 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 is addressed in SA 720(Revised), “The Auditor’s Responsibilities Relating to Other Information”. However, such other information may bring to light a subsequent event that is within the scope of this SA. 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 are appropriately reflected in those financial statements; and respond appropriately to facts that become known to the auditor after the date of the auditor’s report, that, had they been known to the auditor at that date, may have caused the auditor to amend the auditor’s report. This discussion involves some commonly asked FAQs on subsequent events.
I. What types of events specified in SA 560 are encompassed by the financial reporting framework?
The financial reporting framework addresses two types of events that occur after the date of the financial statements:
a) Adjusting Events: Events that provide evidence of conditions existing at the date of the financial statements: These events require adjustments to be made in the financial statements to accurately reflect the conditions already present when the statements were prepared.
b) Non-adjusting Events: Events that provide evidence of conditions arising after the date of the financial statements: These events do not require adjustments in the financial statements, but they do need to be disclosed adequately to ensure that readers of the statements are aware of any significant developments or changes that have occurred since the statements were prepared.
II. Are there any exclusions or exceptions mentioned in SA 560?
SA 560 does not cover the auditor’s responsibilities for other information obtained after the date of the auditor’s report. However, it’s important to note that such other information may reveal a subsequent event that falls within the scope of the SA 560. This means that while the Standard doesn’t specifically address the auditor’s responsibilities for other information if that information uncovers a subsequent event that is relevant to the financial statements, it should be taken into consideration.
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