SA 560 — Subsequent Events

Objective

To obtain sufficient appropriate audit evidence about whether events occurring between the date of the FS and the date of the auditor's report are appropriately reflected (or disclosed) — and to respond to facts known after the report date.

Key requirements

• Procedures to identify subsequent events up to the date of the auditor's report
• Inquiries of management and TCWG
• Reading minutes of meetings after the balance-sheet date
• Specific consideration of management representations on subsequent events
• Procedures for facts becoming known after the auditor's report date

Typical procedures

• Subsequent events checklist
• Review of board / committee minutes through report date
• Inquiry of legal counsel on litigation developments
• Inspection of post-period sales, purchases, payments

Common pitfalls

• Subsequent events cut-off date not properly aligned with audit report date
• No documentation of consideration of post-period events
• Material subsequent event identified but no disclosure follow-up