Question

Explain how auditors treat events that occur after the end of the fiscal year being audited but before the audit opinion has been issued. Describe steps auditors use to identify those events.

Answer 1

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The auditors treat events occur after the end of the fiscal year but before the auditor expressing opinion on the financial statements on the basis of the International Accounting Standard IAS 10 events after the reporting period. The auditor must assess whether the events have been recorded in the books of account in accordance with the accounting standard IAS 10. In order to identify these events the auditor must follow the following steps:

1. Auditors need to check the interim reports prepared by the entity of whose accounts are being audited.
2. The minutes of the board meetings which took place after the end of the reporting period but before the expression of opinion of the auditor on the financial statements.
3. External confirmation from creditors and debtors to check whether the closing balances have been in order.
4. The system that the organization has to record the events occurring after the balance sheet date.
5. Any significant event occurring after the balance sheet date.