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Which of the following is the definition of subsequent events, in accordance with ISA 560 Subsequent events?
a) Events occurring between the first day of the financial year and the date of the auditors report, and facts that become known to the auditor after the date of the auditors report.b) Events occurring between the date the financial statements are approved and the date of the auditor’s report, and facts that become known to the auditor after the date of the auditor’s report.
c) Events occurring between the date of the financial statements and the date of the auditor’s report, and facts that become known to the auditor after the date of the auditor’s report.
d) Events occurring between the date of the financial statements and the date of the auditor’s report, and facts that become known to the auditor before the date of the auditor’s report.
Answer: C
Explanation:Subsequent events are those occurring after the date of the financial statements (the period end) up to the date of the auditor’s report and facts that become known after the date of the auditor’s report.
My Question:
My answer was D. I assumed that date of audit report indicated date of submission of the report. What does “date of audit report” actually imply in general / in this question?
It means the date the audit report is signed. (c) is correct.
(d) is wrong, because the last bit of it “and facts that become known to the auditor before the date of the auditor’s report” would presumably include anything at all in the company’s history. (d) also leaves out the last bit os (c) “and facts that become known to the auditor after the date of the auditor’s report.” In extreme cases the audit report is signed then they find out something relevant to the FS.
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