Page 158 - AAA Integrated Workbook STUDENT S18-J19

Chapter 103 4

Subsequent events

ISA 560 Subsequent Events requires the auditor to obtain sufficient
appropriate evidence that subsequent events occurring between the
date of the financial statements and the date of the auditor's report have
been appropriately accounted for in accordance with IAS 10 Events
After the Reporting Period.

1.1 Adjusting and non-adjusting events

Adjusting events Non-adjusting events

Provide additional evidence about Provide evidence about conditions
conditions existing at the statement of arising after the statement of financial
financial position date. position date.

 Trade receivables become  Fire destroys inventory after the
irrecoverable debts year-end

 Inventory held at year-end is sold  Injury resulting in legal action
for less than cost after year-end occurs after year-end

 Estimate for a provision is revised  Takeover

Adjusting events must be adjusted in the Non-adjusting events must be disclosed
financial statements i.e. a DR and CR in the notes to the financial statements if
posted to correct the figure. material.

If a non-adjusting event impacts the going concern assumption, the event becomes
an adjusting event as the going concern basis of preparation may no longer be
appropriate.

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