Our Recommendations :-
Follow CA IPCC | CA Intermediate FB Page

SA 560- Subsequent events

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 eshaan banerjee asked about 2 years ago

A Limited Company has filed a suit against debtor from whom Rs 2,00,000 are recievable. A judgement is received from court in favour of the company after the date of Balance sheet. Discuss the auditor's duty in this regard?

    0       0 Answer Now Comment Report
5 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered about 2 years ago

> Subsequent events 560 --Financial statements may be affected by certain events that occur after the date of the financial statements. Many financial reporting frameworks specifically refer to such events Such financial reporting frameworks ordinarily identify two types of events: (a) Those that provide evidence of conditions that existed at the date of the financial statements; and (b) Those that provide evidence of conditions that arose after the date of the financial statements. --SA 700 explains that the date of the auditor’s report informs the reader that the auditor has considered the effect of events and transactions of which the auditor becomes aware and that occurred up to that date. **Auditing Procedures in the Subsequent Period in this case** --There is a period after the balance-sheet date with which the auditor must be concerned in completing various phases of his audit. This period is known as the "subsequent period" and is considered to extend to the date of the auditor's report. Its duration will depend upon the practical requirements of each audit and may vary from a relatively short period to one of several months. Also, all auditing procedures are not carried out at the same time and some phases of an audit will be performed during the subsequent period, whereas other phases will be substantially completed on or before the balance-sheet date. --Inquire of client's legal counsel concerning litigation, claims, and assessments. --Read the available minutes of meetings of stockholders, directors, and appropriate committees; as to meetings for which minutes are not available, inquire about matters dealt with at such meetings. --Obtain a letter of representations, dated as of the date of the auditor's report, from appropriate officials, generally the chief executive officer, chief financial officer, or others with equivalent positions in the entity, as to whether any events occurred subsequent to the date of the financial statements being reported on by the independent auditor that in the officer's opinion would require adjustment or disclosure in these statements.

    0       0 Comment Report
Important Note – Preparing for CA IPCC?
CAKART provides Indias top faculty each subject video classes and lectures – online & in Pen Drive/ DVD – at very cost effective rates. Get video classes from CAKART.in. Quality is much better than local tuition, so results are much better.
Watch Sample Video Now by clicking on the link(s) below – 
For any questions Request A Call Back  
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 megha answered about 2 years ago

hello, 1. The purpose of this Standard on Auditing (SA) is to establish standards on the auditor's responsibility regarding subsequent events. In this SA, the term "subsequent events" is used to refer to significant events occurring between the balance sheet date and the date of the auditor's report. In the context of audit of a component, such as a branch or division, of an entity “subsequent events” would refer to significant events upto the date of the report of the auditor of that component of the entity. 2. The auditor should consider the effect of subsequent events on the financial statements and on the auditor's report. 3. Accounting Standard (AS) 4, “Contingencies and Events Occurring After the Balance Sheet Date”, issued by the Institute of Chartered Accountants of India, deals with the treatment in financial statements of events, both favourable and unfavourable, occurring between the balance sheet date and the date on which the financial statements are approved by the Board of Directors in the case of a company, and, by the corresponding approving authority in the case of any other entity. AS 4 identifies two types of events: (a) those which provide further evidence of conditions that existed at the balance sheet date; and (b) those which are indicative of conditions that arose subsequent to the balance sheet date. Audit Procedures

    0       0 Comment Report
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Anil Dhawan answered about 2 years ago

1.The purpose of this Standard on Auditing (SA) is to establish standards on the auditor's responsibility regarding subsequent events. In this SA, the term "subsequent events" is used to refer to significant events occurring between the balance sheet date and the date of the auditor's report. In the context of audit of a component, such as a branch or division, of an entity “subsequent events” would refer to significant events upto the date of the report of the auditor of that component of the entity. 2.The auditor should consider the effect of subsequent events on the financial statements and on the auditor's report. 3.Accounting Standard (AS) 4, “Contingencies and Events Occurring After the Balance Sheet Date”, issued by the Institute of Chartered Accountants of India, deals with the treatment in financial statements of events, both favourable and unfavourable, occurring between the balance sheet date and the date on which the financial statements are approved by the Board of Directors in the case of a company, and, by the corresponding approving authority in the case of any other entity. AS 4 identifies two types of events: (a) those which provide further evidence of conditions that existed at the balance sheet date; and (b) those which are indicative of conditions that arose subsequent to the balance sheet date. Audit Procedures

    0       0 Comment Report
Open uri20170510 32134 1c996lj?1494421732 Anil answered about 2 years ago

1.The purpose of this Standard on Auditing (SA) is to establish standards on the auditor's responsibility regarding subsequent events. In this SA, the term "subsequent events" is used to refer to significant events occurring between the balance sheet date and the date of the auditor's report. In the context of audit of a component, such as a branch or division, of an entity “subsequent events” would refer to significant events upto the date of the report of the auditor of that component of the entity. 2.The auditor should consider the effect of subsequent events on the financial statements and on the auditor's report. 3.Accounting Standard (AS) 4, “Contingencies and Events Occurring After the Balance Sheet Date”, issued by the Institute of Chartered Accountants of India, deals with the treatment in financial statements of events, both favourable and unfavourable, occurring between the balance sheet date and the date on which the financial statements are approved by the Board of Directors in the case of a company, and, by the corresponding approving authority in the case of any other entity. AS 4 identifies two types of events: (a) those which provide further evidence of conditions that existed at the balance sheet date; and (b) those which are indicative of conditions that arose subsequent to the balance sheet date. Audit Procedures 4.The auditor should perform procedures designed to obtain sufficient appropriate audit evidence that all events up to the date of the auditor's report that may require adjustment of, or disclosure in, the financial statements have been identified. These procedures are in addition to routine procedures which may be applied to specified transactions occurring after the balance sheet date to obtain audit evidence as to account balances as at the balance sheet date, for example, the testing of inventory cut-off and payments to creditors. The auditor is not, however, expected to conduct a continuing review of all matters to which previously applied procedures have provided satisfactory conclusions.

    0       0 Comment Report
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Aarti Vadnerkar answered about 2 years ago

1. The purpose of this Standard on Auditing (SA) is to establish standards on the auditor's responsibility regarding subsequent events. In this SA, the term "subsequent events" is used to refer to significant events occurring between the balance sheet date and the date of the auditor's report. In the context of audit of a component, such as a branch or division, of an entity “subsequent events” would refer to significant events upto the date of the report of the auditor of that component of the entity. 2. The auditor should consider the effect of subsequent events on the financial statements and on the auditor's report. 3. Accounting Standard (AS) 4, “Contingencies and Events Occurring After the Balance Sheet Date”, issued by the Institute of Chartered Accountants of India, deals with the treatment in financial statements of events, both favourable and unfavourable, occurring between the balance sheet date and the date on which the financial statements are approved by the Board of Directors in the case of a company, and, by the corresponding approving authority in the case of any other entity. AS 4 identifies two types of events: (a) those which provide further evidence of conditions that existed at the balance sheet date; and (b) those which are indicative of conditions that arose subsequent to the balance sheet date. Audit Procedures 4. The auditor should perform procedures designed to obtain sufficient appropriate audit evidence that all events up to the date of the auditor's report that may require adjustment of, or disclosure in, the financial statements have been identified. These procedures are in addition to routine procedures which may be applied to specified transactions occurring after the balance sheet date to obtain audit evidence as to account balances as at the balance sheet date, for example, the testing of inventory cut-off and payments to creditors. The auditor is not, however, expected to conduct a continuing review of all matters to which previously applied procedures have provided satisfactory conclusions. 5. The procedures to identify events that may require adjustment of, or Subsequent Events IV-351 SA 560 disclosure in, the financial statements would be performed as near as practicable to the date of the auditor's report and ordinarily include the following:  Reviewing procedures that the management has established to ensure that subsequent events are identified.  Reading minutes of the meetings of shareholders, the board of directors and audit and executive committees held after the balance sheet date and inquiring about matters discussed at meetings for which minutes are not yet recorded.  Reading the entity's latest available interim financial statements and, as considered necessary and appropriate, budgets, cash flow forecasts and other related management reports.  Inquiring, or extending previous oral or written inquiries, of the entity's lawyers concerning litigation and claims.  Inquiring of management as to whether any subsequent events have occurred after the balance sheet date which might affect the financial statements. Examples of inquiries of management on specific matters are:  The current status of items that were accounted for on the basis of preliminary or inconclusive data.  Whether there have been any developments regarding risk areas and contingencies.  Whether any unusual accounting adjustments have been made or are contemplated.  Whether any events have occurred or are likely to occur which will bring into question the appropriateness of accounting policies used in the financial statements as would be the case, for example, if such events call into question the validity of the going concern assumption. 6. When a component, such as a division or a branch, of an entity, has already been audited by another auditor, the principal auditor would make similar enquiries as set out in para 5 in respect of events, occurring between the date of signing of the report of the auditor of the component of the entity and signing of his report. Handbook of Auditing Pronouncements-I SA 560 IV-352 7. When the auditor becomes aware of events which materially affect the financial statements, the auditor should consider whether such events are properly accounted for in the financial statements. When the management does not account for such events that the auditor believes should be accounted for, the auditor should express a qualified opinion or an adverse opinion, as appropriate

    0       0 Comment Report
Get Notifications
Videos
Books
Notes
Loading
SIGN UP
Watch best faculty demo video classes

These top faculty video lectures will
help u prepare like nothing else can.