Topic F-1 Subsequent Events.docVIP

　　Auditors should consider the effect of subsequent events （after the balance sheet date） on the accounts.　　‘Subsequent events’ include:　　Events occurring between the period end and the date of the auditor’s report　　Facts discovered after the date of the auditor’s report;　　ISA560 Subsequent events begins by stating that:’ The auditor should consider the effect of subsequent events on the financial statements and on the auditor’s report.’　　IAS10 Events after the balance sheet date deals with the treatment in financial statement of events, both favorable and unfavorable, occurring after the period end. It identifies two types of events:　　Those that provide further evidence of conditions that existed at the period end;　　Those that are indicative of conditions that arose subsequent to the period end;　　Accounting and disclosure　　A material post-balance sheet event requires changes （i.e. adjustments） in the amounts to be included in financial statements where:　　It is an adjusting event, or　　It indicates that application of the going concern concept to the company is not appropriate.　　A material post-balance sheet event should be disclosed where it is a non-adjusting event of such materiality that its non-disclosure would affect the ability of the users of financial statements to reach a proper understanding of the financial position.　　For each post-balance sheet event which is required to be disclosed, the following information should be stated by way of notes in financial statements:　　The nature of the event　　An estimate of the financial effect, or a statement that it is not practicable to make such an estimate.　　N.B.　　The post balance sheet period covered by IAS10 only stretches between the balance sheet date and the date when the account are authorized for issue, i.e. it is shorter than the subsequent events period of ISA560.　　Procedures　　Auditors have a responsibility to review subsequent events before they sign their audit report, and may have to