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Hi, I know that subsequent events also include the facts known to the auditor after the financial statements are authorized, but if we get technical and talk specifically about subsequent events between reporting date and when financial statements are authorized/auditors report is signed, to which event does this actually refer as the “end” here? Is it when auditor report is signed or when f/s are authorized? I know in most instances these are assumed to happen on the same date, but I had a friend tell me that he was asked specifically about the “end event” here in the last attempt, the options had the date of report being signed and the date of f/s being authorized separately.
Kindly help me in this regard
https://opentuition.com/topic/aa-quiz-corner-what-is-it-how-does-it-work can you please see if my debrief of Q7 answers your question? If not do please ask again.
So just to confirm, their statuary duty technically ends when the audit report is signed, am i right?
The auditor’s STATUTORY duty to REPORT on the annual accounts of a company that are to be issued to the members (typically at the AGM) is fulfilled when when the auditor’s report is signed.
But the auditor’s PROFESSIONAL duty (e.g. requirements under ISA 560) continue – “passive” duty is still duty.
Also – although signing the auditor’s reports satisfies the auditor’s duty to REPORT – the auditor’s appointment does not come to an end until the AGM (when one of the resolutions on the agenda will be appointment/reappointment of an auditor for the next financial year). This makes it possible for the auditor to “do something” about subsequent events that come to light after the report is signed but before the financial statements are issued.
The auditor’s professional duty actually continues BEYOND that (though you wouldn’t be examined on this in AA). If after the AGM an auditor were to be come aware of something that meant “oops! the audit opinion might have been wrong!” (i.e. unmodified opinion given would have been modified if only ….) it’s not a case of – “oh never mind – too late to do anything about it” – the auditor would want (even if not required) to take steps to mitigate reputational damage and professional liability if the members were to sue the auditor.
And could I ask you please if you have other questions for me rather than your fellow students that you select the TUTOR forum.
Thank you so much for the detailed response, and please forgive my ignorance, I thought I was on the right forum (ask the tutor one), I’m sorry if it caused any inconvenience.
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