Under PCAOB standards, three short sections cover what AU-C 560 handles in one. AS 2801 defines the two types of subsequent events and lists the procedures to run at or near the report date. AS 3110 sets the report date and the two ways to date a report when an event is disclosed after fieldwork ends. AS 2905 covers facts discovered after the report date. The substance matches AU-C 560 on most points; the differences are in the procedure list and terminology.
For the AU-C side, see subsequent events procedures through the report date, subsequently discovered facts and dual dating and the AU-C 560 standards page.
What are the two types of subsequent events?
AS 2801.03 describes events that provide additional evidence about conditions that existed at the balance sheet date and affect estimates. The statements are adjusted. AS 2801.05 describes events that provide evidence about conditions that arose after the balance sheet date. They are not adjusted, but disclosure may be required, and pro forma data may be appropriate.
The examples: a customer's bankruptcy after year end from deteriorating financial condition points to conditions at the balance sheet date, so the receivable is adjusted. A loss from a customer's fire or flood after year end does not, so it is disclosed (AS 2801.04, .06). Litigation settlement requires adjustment if the event behind the claim, such as an injury or infringement, occurred before the balance sheet date. AU-C 560.02 recognizes the same two categories and leaves the accounting to the framework; our type 1 and type 2 guide covers the ASC 855 treatment.
The subsequent period runs from the balance sheet date to the date of the auditor's report (AS 2801.10). AU-C 560.07 defines subsequent events the same way.
Which procedures does each standard require?
AS 2801.12 says the auditor should perform procedures at or near the report date, and generally should:
- read the latest interim financial statements and compare them with the statements under audit, after asking whether they were prepared on the same basis;
- inquire of officers about contingent liabilities and commitments, changes in capital stock, long-term debt or working capital, items accounted for on tentative data, unusual adjustments, related party changes, new related party transactions and significant unusual transactions;
- read minutes of stockholders, directors and committees;
- inquire of the client's legal counsel;
- obtain a representation letter dated as of the report date on whether events occurred that would require adjustment or disclosure; and
- make additional inquiries to resolve questions that arise.
AU-C 560.10 lists four procedures: understand management's process for identifying subsequent events, inquire of management and those charged with governance, read minutes of meetings held after the balance sheet date, and read the latest interim financial statements. The legal counsel inquiry and the representation letter are not in that list; they come from the application material pointing to AU-C 501 (.A8) and AU-C 580 (.A9).
Both standards relieve repeated work: AU-C 560.09 excuses further procedures where earlier ones gave satisfactory conclusions, and AS 2801.10 says no continuing review of resolved matters is expected.
How is the report dated?
AS 3110.01 says the auditor should date the report no earlier than the date sufficient appropriate evidence has been obtained to support the opinion. AU-C 700.43 sets the same floor and adds that the evidence must show all statements and disclosures have been prepared and that management has asserted it has taken responsibility for them.
AS 3110.02 says the auditor has no responsibility for procedures after the report date, except for filings under the Securities Act of 1933 (see AS 4101).
What is dual dating, and how does PCAOB treat it?
AS 3110.05 gives two methods when an event disclosed in the statements occurs after the auditor has the evidence for the opinion but before the statements are issued:
- Dual dating. For example, "February 16, 20__, except for Note , as to which the date is March 1, 20." Responsibility for events after the original date is limited to the specific event in the note.
- Dating as of the later date. The auditor's responsibility for subsequent events extends to the later date, and the AS 2801.12 procedures generally should be extended to that date.
AU-C 560.13 gives the same two methods and adds written representation requirements. Under the later-date method the auditor extends procedures and gets representations as of the new date. Under dual dating the auditor requests representations as of the additional date about whether any information would cause management to modify previous representations, and whether other events occurred requiring adjustment or disclosure. Paragraph .A13 gives the AU-C wording: "(Date of auditor's report), except as to note Y, which is as of (date of completion of audit procedures limited to revision described in note Y)."
Worked example
A calendar-year client's auditor has the evidence for the opinion on March 4, 2027. On March 19, a lender notifies the client that it is calling a term loan. Management revises the statements to add Note 12 and plans to issue on March 24.
| Choice | Report date line | Procedures |
|---|---|---|
| Dual date | March 4, 2027, except for Note 12, as to which the date is March 19, 2027 | Procedures limited to Note 12; representations as of March 19 under AU-C 560.13b |
| Later date | March 19, 2027 | AS 2801.12 or AU-C 560.09 and .10 procedures extended to March 19, new representation letter |
Dual dating confines the added procedures to Note 12, so the auditor has no responsibility for anything else in the 15 days from March 4 to March 19. If the client has other open matters in that window, the later date is the safer fit. Document the choice either way.
What if the event occurs after the report date but before issuance?
AS 3110.03 says that if an adjusting-type event occurs after the report date but before issuance and comes to the auditor's attention, the statements should be adjusted or the auditor should qualify the opinion. For a disclosure-type event, AS 3110.04 says it should be disclosed in a note or the auditor should qualify the opinion. AU-C 560.14 requires a qualified or adverse opinion under AU-C 705 if management does not revise statements the auditor believes need revision.
AS 2801.09 notes that an unusually important subsequent event may justify an emphasis paragraph; AS 3101.19 lists unusually important subsequent events among matters that might be emphasized. Under US GAAS, AU-C 706.08 provides the emphasis-of-matter paragraph for a disclosed matter that is fundamental to users' understanding of the statements.
What changes after the statements are issued?
AS 2905 applies when the auditor learns after the report date of facts that may have existed at that date and might have affected the report. The auditor determines reliability and whether the facts existed at the report date (.04), then acts if the report would have been affected and persons are relying or likely to rely on the statements (.05). The client is advised to disclose the facts, through revised statements and a revised report when the effect can promptly be determined (.06). If the client refuses, the auditor notifies each board member and, absent contrary advice from the auditor's attorney, notifies the client that the report must no longer be associated with the statements, notifies regulators, and notifies known relying persons (.08).
AU-C 560.15 to .18 follows a parallel path for facts found after the report release date (the date the auditor grants permission to use the report, AU-C 230.06), a term AS 3110 does not use.
Frequently asked questions
Does the representation letter date matter?
Yes. AS 2801.12e says the letter is dated as of the date of the auditor's report. AU-C 560.A9 points to AU-C 580 for the same alignment.
Can I reissue my report with the original date?
AS 3110.06 says use of the original report date in a reissued report removes any implication that records, transactions or events after that date have been examined. If an event requiring adjustment or disclosure has come to the auditor's attention, AS 3110.07 requires dating under the AS 3110.05 methods.
Sources
- PCAOB, AS 2801, Subsequent Events (paragraphs .02 to .12), AS 3110, Dating of the Independent Auditor's Report (paragraphs .01 to .08), AS 2905, Subsequent Discovery of Facts Existing at the Date of the Auditor's Report (paragraphs .04 to .08), and AS 3101, paragraph .19: https://pcaobus.org/oversight/standards/auditing-standards/details/AS2801
- AICPA, AU-C Section 560, Subsequent Events and Subsequently Discovered Facts (paragraphs .07 to .18, .A8 to .A14), and AU-C Section 700, paragraph .43: https://www.aicpa-cima.com/resources/landing/aicpa-professional-standards
CORAA prepares ready-to-review audit files for US CPA firms from client books; you review and sign. See /us.
Part of CORAA University · Evidence and audit procedures: related guides, calculators and templates.
AU-C references are to AICPA Professional Standards, paraphrased here; read the standard itself before relying on a requirement. This page is guidance, not professional advice. Report an error