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Review of The Event After The Reporting Period

This document discusses types of events that may occur after a reporting period known as subsequent events. There are two types: adjusting events and non-adjusting events. Adjusting events provide evidence of conditions that existed at the end of the reporting period, such as a court settlement confirming a prior obligation. Non-adjusting events indicate conditions that arose after the reporting period, like a business combination or major asset sale. The auditor's procedures for subsequent events include understanding management's identification process, inquiring with management and directors, reviewing meeting minutes, and reading disclosed commitments.

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40 views1 page

Review of The Event After The Reporting Period

This document discusses types of events that may occur after a reporting period known as subsequent events. There are two types: adjusting events and non-adjusting events. Adjusting events provide evidence of conditions that existed at the end of the reporting period, such as a court settlement confirming a prior obligation. Non-adjusting events indicate conditions that arose after the reporting period, like a business combination or major asset sale. The auditor's procedures for subsequent events include understanding management's identification process, inquiring with management and directors, reviewing meeting minutes, and reading disclosed commitments.

Uploaded by

Lu Lac
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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REVIEW OF THE EVENT AFTER THE REPORTING

PERIOD

TYPES OF EVENTS AFTER


REPORTING PERIOD also
known as Subsequent Events

1) Adjusting Events
PAS 10, Paragraph 3, defines it 2) Non-adjusting Events
- are those that provide evidence of conditions as those events, whether
-are those that are indicative of conditions
that exist at the end of reporting period. favorable or unfavorable, that
that arise after the end of reporting period.

EXAMPLES OF ADJUSTING EVENT:


-Settlement after the reporting period of a court case because EXAMPLES OF NON-ADJUSTING EVENT:
it confirms that the entity already had a present obligation at - Business combination after the reporting period
the end of the reporting period -Plan to discontinue an operation
- Bankruptcy of a customer which occurs after the reporting -Major purchase and disposal of asset or expropriation of major
period The following are the procedure may be done by the auditor: asset by government
- Sale of inventories after the reporting period may give -Destruction of a major production plant by a fire after the
- Obtain understanding of any procedures management has reporting period
evidence about the net realizable value at reporting date
established to ensure that subsequent events identified - Major ordinary share transactions and potential ordinary
-The determination after the reporting period of the cost of
- Inquiry from management and those charged with share transactions after the reporting period
asset purchased or the proceeds from asset before the
governance -Announcing or commencing the implementation of a major
reporting period
- Reading minutes of the meetings of the shareholders, restructuring
- The determination after other reporting period of the profit
management and those charged with governance -Abnormally large changes after the reporting period in asset
sharing or bonus payment if the entity has the present
obligation at the end of the reporting period to make such prices or foreign exchange rates
payment -Entering into significant commitments or contingent liabilities
-The discovery of fraud or errors that show the financial
statement is incorrect - Commencing major litigation arising solely from events that
occurred after the reporting period

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