Subsequent Events

Question 1

Auditors Responsibility for subsequent events are to

Answer 1

(PRIME)

Post balance sheet transactions
Representation letter from management
Inquire on subsequent events
Minutes should be read
Examine most current available interim FS

Question 2

Type I events

Answer 2

Exist on or before the balance sheet date

Requires a FS adjustment

Question 3

Type II events

Answer 3

Exist after the balance sheet date

May require footnote disclosure

Question 4

What subsequent events should be inquired about

Answer 4

1. New commitments
2. Sales or Acquisitions of assets
3. Increases in capital
4. Assets appropriated
5. Contingencies
6. Unusual adjustments
7. Measurements of estimates
8. recoverability of assets

Question 5

If FS need to be revised to reflect a subsequent event and management refuses the auditor should express a

Answer 5

qualified or adverse opinion (GAAP issue)

Question 6

The auditor has no active responsibility to make continuing inquires between

Answer 6

the date of the auditors report and the date on which the report is submitted