What is a subsequent event in audit process?

What is a subsequent event in audit process?

A subsequent event is an event that occurs after a reporting period, but before the financial statements for that period have been issued or are available to be issued. Depending on the situation, such events may or may not require disclosure in an organization’s financial statements.

What are the auditor’s responsibility for subsequent events?

10, the auditor identifies subsequent events that require adjustment of, or disclosure in, the financial statements, the auditor should determine whether each such event is appropriately reflected in the financial statements in accor- dance with the applicable financial reporting framework.

What are passed audit adjustments?

An audit adjustment is a proposed correction to the general ledger that is made by a company’s outside auditors. In most cases, the client approves the proposed adjustments and records them as requested by the auditors, making it much easier for the auditor to justify a clean audit opinion.

What are the 8 types of audit evidence?

What Are the Types of Audit Evidence?

• Physical examination.
• Confirmations.
• Documentary evidence.
• Analytical procedures.
• Oral evidence.
• Accounting system.
• Reperformance.
• Observatory evidence.

Why is consideration of subsequent events an important part of the audit?

Subsequent events are a key examinable area in auditing papers and it is crucial that students have an understanding of the types of audit evidence that the auditor should obtain to confirm that the accounting and disclosure requirements (particularly in IAS 10) have been applied correctly within the financial …

What are the two types of subsequent events?

There are two types of subsequent events:

• Adjusting events. An event that provides additional information about pre-existing conditions that existed on the balance sheet date.
• Non-adjusting events. A subsequent event that provides new information about a condition that did not exist on the balance sheet date.

What is the effect of subsequent events on the audit report?

These events show conditions that arose after the date of the balance sheet, as subsequent events of these kinds, provide evidence of the non-present conditions on the date of balance sheet – the subject of the report – which, on the other hand, are important enough to require the disclosure of the associated financial …

What is Aje and RJE?

AJE – Adjusting Journal Entry. RJE – Reclassifying Journal Entry. FTJE – Federal Tax Journal Entry.

What is the best type of audit evidence?

Examples of auditing evidence include bank accounts, management accounts, payrolls, bank statements, invoices, and receipts. Good auditing evidence should be sufficient, reliable, provided from an appropriate source, and relevant to the audit at hand.

What type of audit evidence is the weakest?

One of the weakest forms of audit evidence is management inquiry. Management inquiry is when the auditor simply asks management about an accounting transaction. While this is not an appropriate audit procedure on its own, it is useful when used with other procedures.

Why are subsequent events important?

Subsequent events can invalidate information used in the summary. The adjustment of records for subsequent events can improve a company’s financial picture, an important consideration for a business that hopes to attract lenders or investors.