ISA 560 (Redrafted)International Auditing

April 2008 and Assurance

Standards Board

Redrafted International Standard on Auditing

ISA 560, Subsequent Events

 International Auditing and Assurance Standards Board International Federation of Accountants 545
Fifth Avenue, 14th Floor New York, New York 10017 USA

This International Standard on Auditing (ISA) 560 (Redrafted), “Subsequent Events” was prepared
by the International Auditing and Assurance Standards Board (IAASB), an independent standard-
setting body within the International Federation of Accountants (IFAC). The objective of the IAASB
is to serve the public interest by setting high quality auditing and assurance standards and by
facilitating the convergence of international and national standards, thereby enhancing the quality
and uniformity of practice throughout the world and strengthening public confidence in the global
auditing and assurance profession.

This publication may be downloaded free of charge from the IFAC website: http://www.ifac.org. The
approved text is published in the English language.

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and contribute to the development of strong international economies by establishing and promoting
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ISBN: 978-1-934779-17-0
2
 INTERNATIONAL STANDARD ON AUDITING 560
(REDRAFTED)
SUBSEQUENT EVENTS
(Effective for audits of financial statements for periods beginning on or after December 15, 2009)
CONTENTS
Paragraph
Introduction
Scope of this ISA ............................................................................................................. 1-2
Effective Date .................................................................................................................. 3
Objectives....................................................................................................................... 4
Definitions ....................................................................................................................... 5
Requirements
Events Occurring Between the Date of the Financial Statements and the Date of the Auditor’s Report
........................................................................................................... 6-9
Facts Which Become Known to the Auditor After the Date of the Auditor’s Report but Before the
Date the Financial Statements are Issued .............................................. 10-13
Facts Which Become Known to the Auditor After the Financial Statements have been
Issued .................................................................................................................... 14-17
Application and Other Explanatory Material
Introduction ...................................................................................................................... A1
Definitions...................................................................................................................... A2-A5
Events Occurring Between the Date of the Financial Statements and the Date of the Auditor’s Report
........................................................................................................... A6-A10
Facts Which Become Known to the Auditor After the Date of the Auditor’s Report but Before the
Date the Financial Statements are Issued .............................................. A11-A16
Facts Which Become Known to the Auditor After the Financial Statements have been
Issued .................................................................................................................... A17-A18
International Standard on Auditing (ISA) 560 (Redrafted), “Subsequent Events” should be read in
conjunction with [proposed] ISA 200 (Revised and Redrafted), “Overall Objective of the
Independent Auditor, and the Conduct of an Audit in Accordance with International Standards on
Auditing.”
3 INTERNATIONAL STANDARD ON AUDITING 560 (REDRAFTED)
 Introduction
Scope of this ISA
1. This International Standard on Auditing (ISA) deals with the auditor’s responsibilities relating to
subsequent events in an audit of financial statements. (Ref: Para. A1)

2. Financial statements may be affected by certain events that occur after the date of the financial
statements. Many financial reporting frameworks specifically refer to such events.1 Such financial
reporting frameworks ordinarily identify two types of events:
(a) Those that provide evidence of conditions that existed at the date of the financial statements; and
(b) Those that provide evidence of conditions that arose after the date of the financial statements.

[Proposed] ISA 700 (Redrafted) explains that the date of the auditor’s report informs the reader that
the auditor has considered the effect of events and transactions of which the auditor becomes
aware and that occurred up to that date.2

Effective Date
1. This ISA is effective for audits of financial statements for periods beginning on or after
December 15, 2009.

Objectives
4. The objectives of the auditor are to:
(a) Obtain sufficient appropriate audit evidence about whether events occurring between the date of the
financial statements and the date of the auditor’s report that require adjustment of, or disclosure in,
the financial statements are appropriately reflected in those financial statements; and
(b) Respond appropriately to facts that become known to the auditor after the date of the auditor’s report,
that, had they been known to the auditor at that date, may have caused the auditor to amend the
auditor’s report.

Definitions
5. For purposes of the ISAs, the following terms have the meanings attributed below:
(a) Date of the financial statements – The date of the end of the latest period covered by the financial
statements.

1 For example, International Accounting Standard (IAS) 10, “Events After the Balance Sheet Date” deals with the
treatment in financial statements of events, both favorable and unfavorable, that occur between the date of the
financial statements (referred to as the “balance sheet date” in the IAS) and the date when the financial
statements are authorized for issue.
2 [Proposed] ISA 700 (Redrafted), “The Independent Auditor’s Report on General Purpose Financial Statements,”
paragraph [A41].
4 INTERNATIONAL STANDARD ON AUDITING 560 (REDRAFTED)
 (b) Date of approval of the financial statements – The date on which all the statements that comprise
the financial statements have been prepared and those with the recognized authority have asserted
that they have taken responsibility for those financial statements. (Ref: Para. A2)

(c) Date of the auditor’s report – The date the auditor dates the report on the financial statements in
accordance with [proposed] ISA 700 (Redrafted). (Ref: Para. A3)

(d) Date the financial statements are issued – The date that the auditor’s report and audited financial
statements are made available to third parties. (Ref: Para. A4-A5)

(e) Subsequent events – Events occurring between the date of the financial statements and the date of
the auditor’s report, and facts that become known to the auditor after the date of the auditor’s report.

Requirements
Events Occurring Between the Date of the Financial Statements and the Date of the Auditor’s
Report
6. The auditor shall perform audit procedures designed to obtain sufficient appropriate audit evidence
that all events occurring between the date of the financial statements and the date of the auditor’s
report that require adjustment of, or disclosure in, the financial statements have been identified.
The auditor is not, however, expected to perform additional audit procedures on matters to which
previously applied audit procedures have provided satisfactory conclusions. (Ref: Para. A6)

7. The auditor shall perform the procedures required by paragraph 6 so that they cover the period
from the date of the financial statements to the date of the auditor’s report, or as near as
practicable thereto. The auditor shall take into account the auditor’s risk assessment in
determining the nature and extent of such audit procedures, which shall include the following:
(Ref: Para. A7-A8)
(a) Obtaining an understanding of any procedures management has established to ensure that subsequent
events are identified.
(b) Inquiring of management and, where appropriate, those charged with governance as to whether any
subsequent events have occurred which might affect the financial statements. (Ref: Para. A9)
(c) Reading minutes, if any, of the meetings, of the entity’s owners, management and those charged with
governance, that have been held after the date of the financial statements and inquiring about matters
discussed at any such meetings for which minutes are not yet available. (Ref: Para. A10)
(d) Reading the entity’s latest subsequent interim financial statements, if any.
 8. When, as a result of the procedures performed as required by paragraphs 6 and 7, the auditor
identifies events that require adjustment of, or disclosure in, the financial statements, the auditor
shall determine whether each such event is appropriately reflected in those financial statements.

5 INTERNATIONAL STANDARD ON AUDITING 560 (REDRAFTED)

3 ISA 580 (Revised and Redrafted), “Written Representations.”
Written Representations
1. The auditor shall request management and, where appropriate, those charged with governance, to
provide a written representation in accordance with ISA 580 (Revised and Redrafted)3 that all
events occurring subsequent to the date of the financial statements and for which the applicable
financial reporting framework requires adjustment or disclosure have been adjusted or disclosed.

Facts Which Become Known to the Auditor After the Date of the Auditor’s Report but Before
the Date the Financial Statements are Issued
10. The auditor has no obligation to perform any audit procedures regarding the financial statements
after the date of the auditor’s report. However, when, after the date of the auditor’s report but
before the date the financial statements are issued, a fact becomes known to the auditor that, had
it been known to the auditor at the date of the auditor’s report, may have caused the auditor to
amend the auditor’s report, the auditor shall: (Ref: Para. A11)
(a) Discuss the matter with management and, where appropriate, those charged with governance.
(b) Determine whether the financial statements need amendment and, if so,
(c) Inquire how management intends to address the matter in the financial statements.
11. If management amends the financial statements, the auditor shall:
(a) Carry out the audit procedures necessary in the circumstances on the amendment.
(b) Unless the circumstances in paragraph 12 apply:
(i) Extend the audit procedures referred to in paragraphs 6 and 7 to the date of the new auditor’s report;
and
(ii) Provide a new auditor’s report on the amended financial statements. The new auditor’s report shall
not be dated earlier than the date of approval of the amended financial statements.
12. When law, regulation or the financial reporting framework does not prohibit management from
restricting the amendment of the financial statements to the effects of the subsequent event or
events causing that amendment and those responsible for approving the financial statements are
not prohibited from restricting their approval to that amendment, the auditor is permitted to
restrict the audit procedures on subsequent events required in paragraph 11(b)(i) to that
amendment. In such cases, the auditor shall either:
(a) Amend the auditor’s report to include an additional date restricted to that amendment that thereby
indicates that the auditor’s procedures on subsequent events are restricted solely to the amendment of
the financial statements described in the relevant note to the financial statements; or (Ref: Para. A12)

6 INTERNATIONAL STANDARD ON AUDITING 560 (REDRAFTED)

 4 See [proposed] ISA 706 (Revised and Redrafted), “Emphasis of Matter Paragraphs and Other Matter(s) Paragraphs
in the Independent Auditor’s Report.”
5 [Proposed] ISA 705 (Revised and Redrafted), “Modifications to the Independent Auditor’s Report.”
(b) Provide a new or amended auditor’s report that includes a statement in an Emphasis of Matter
paragraph4 or Other Matter(s) paragraph that conveys that the auditor’s procedures on subsequent
events are restricted solely to the amendment of the financial statements as described in the relevant
note to the financial statements.
13. In some jurisdictions, management may not be required by law, regulation or the financial
reporting framework to issue amended financial statements and, accordingly, the auditor need not
provide an amended or new auditor’s report. However, when management does not amend the
financial statements in circumstances where the auditor believes they need to be amended, then:
(Ref: Para. A13-A14)
(a) If the auditor’s report has not yet been provided to the entity, the auditor shall modify the
opinion as required by [proposed] ISA 705 (Revised and Redrafted)5 and then provide
the auditor’s report; or
(b) If the auditor’s report has already been provided to the entity, the auditor shall notify
management and, unless all of those charged with governance are involved in
managing the entity, those charged with governance, not to issue the financial
statements to third parties before the necessary amendments have been made. If the
financial statements are nevertheless subsequently issued without the necessary
amendments, the auditor shall take appropriate action, to seek to prevent reliance on the
auditor’s report. (Ref. Para: A15-A16)

Facts Which Become Known to the Auditor After the Financial Statements have been Issued
14. After the financial statements have been issued, the auditor has no obligation to perform any
audit procedures regarding such financial statements. However, when, after the financial
statements have been issued, a fact becomes known to the auditor that, had it been known to the
auditor at the date of the auditor’s report, may have caused the auditor to amend the auditor’s
report, the auditor shall:
(a) Discuss the matter with management and, where appropriate, those charged with governance.
(b) Determine whether the financial statements need amendment and, if so,
(c) Inquire how management intends to address the matter in the financial statements.
15. If management amends the financial statements, the auditor shall: (Ref: Para. A17)
(a) Carry out the audit procedures necessary in the circumstances on the amendment.
(b) Review the steps taken by management to ensure that anyone in receipt of the previously issued
financial statements together with the auditor’s report thereon is informed of the situation.

7 INTERNATIONAL STANDARD ON AUDITING 560 (REDRAFTED)

(c) Unless the circumstances in paragraph 12 apply:
(i) Extend the audit procedures referred to in paragraphs 6 and 7 to the date of the new auditor’s
report, and date the new auditor’s report no earlier than the date of approval of the amended financial
statements; and
(ii) Provide a new auditor’s report on the amended financial statements.
(d) When the circumstances in paragraph 12 apply, amend the auditor’s report, or provide a new
auditor’s report as required by paragraph 12.
16. The auditor shall include in the new or amended auditor’s report an Emphasis of Matter
paragraph or Other Matter(s) paragraph referring to a note to the financial statements that more
extensively discusses the reason for the amendment of the previously issued financial statements
and to the earlier report provided by the auditor.
17. If management does not take the necessary steps to ensure that anyone in receipt of the
previously issued financial statements is informed of the situation and does not amend the
financial statements in circumstances where the auditor believes they need to be amended, the
auditor shall notify management and, unless all of those charged with governance are involved in
managing the entity, those charged with governance, that the auditor will seek to prevent future
reliance on the auditor’s report. If, despite such notification, management or those charged with
governance do not take these necessary steps, the auditor shall take appropriate action to seek to
prevent reliance on the auditor’s report. (Ref: Para. A18)

***

Application and Other Explanatory Material

Introduction (Ref: Para. 1)
1. When the audited financial statements are included in other documents subsequent to the
issuance of the financial statements, the auditor may have additional responsibilities relating to
subsequent events that the auditor may need to consider, such as legal or regulatory requirements
involving the offering of securities to the public in jurisdictions in which the securities are being
offered. For example, the auditor may be required to perform additional audit procedures to the date
of the final offering document. These procedures may include those referred to in paragraphs 6 and 7
performed up to a date at or near the effective date of the final offering document, and reading the
offering document to assess whether the other information in the offering document is consistent
with the financial information with which the auditor is associated.

Definitions
Date of Approval of the Financial Statements (Ref: Para. 5(b))
1. In some jurisdictions, law or regulation identifies the individuals or bodies (for example,
management or those charged with governance) that are responsible for concluding that all the
statements comprising the financial statements have been prepared, and specifies

8 INTERNATIONAL STANDARD ON AUDITING 560 (REDRAFTED)

6 [Proposed] ISA 700 (Redrafted), paragraph [38]. In rare circumstances, law or regulation also identifies the point in
the financial statement reporting process at which the audit is expected to be complete.
the necessary approval process. In other jurisdictions, the approval process is not prescribed in law or
regulation and the entity follows its own procedures in preparing and finalizing its financial
statements in view of its management and governance structures. In some jurisdictions, final
approval of the financial statements by shareholders is required. In these jurisdictions, final approval
by shareholders is not necessary for the auditor to conclude that sufficient appropriate audit evidence
on which to base the auditor’s opinion on the financial statements has been obtained. The date of
approval of the financial statements for purposes of the ISAs is the earlier date on which those with
the recognized authority have asserted that all the statements comprising the financial statements
have been prepared and that those with the recognized authority have taken responsibility for those
financial statements.

Date of the Auditor’s Report (Ref: Para. 5(c))

1. The auditor’s report cannot be dated earlier than the date on which the auditor has obtained
sufficient appropriate audit evidence on which to base the opinion on the financial statements.6
Sufficient appropriate audit evidence includes evidence that all the statements that comprise the
financial statements have been prepared and that those with the recognized authority have asserted
that they have taken responsibility for those financial statements. Consequently, the date of the
auditor’s report cannot be earlier than the date of approval of the financial statements as defined in
paragraph 5(b). A time period may elapse due to administrative issues between the date of the
auditor’s report as defined in paragraph 5(c) and the date the auditor’s report is provided to the entity.

Date the Financial Statements are Issued (Ref: Para. 5(d))

1. The date the financial statements are issued generally depends on the regulatory environment
of the entity. In some circumstances, the date the financial statements are issued may be the date that
they are filed with a regulatory authority. Since audited financial statements cannot be issued without
an auditor’s report, the date that the audited financial statements are issued must not only be at or
later than the date of the auditor’s report, but must also be at or later than the date the auditor’s report
is provided to the entity.

Considerations Specific to Public Sector Entities

1. In the case of the public sector, the date the financial statements are issued may be the date
the audited financial statements and the auditor’s report thereon are presented to the legislature or
otherwise made public.

Events Occurring Between the Date of the Financial Statements and the Date of the Auditor’s
Report (Ref: Para. 6-9)
1. Depending on the auditor’s risk assessment, the audit procedures required by paragraph 6
may include procedures, necessary to obtain sufficient appropriate audit evidence,

9 INTERNATIONAL STANDARD ON AUDITING 560 (REDRAFTED)

involving the review or testing of accounting records or transactions occurring between the date of
the financial statements and the date of the auditor’s report. The audit procedures required by
paragraphs 6 and 7 are in addition to procedures that the auditor may perform for other purposes that,
nevertheless, may provide evidence about subsequent events (for example, to obtain audit evidence
for account balances as at the date of the financial statements, such as cut-off procedures or
procedures in relation to subsequent receipts of accounts receivable).

A7. Paragraph 7 stipulates certain audit procedures in this context that the auditor is required to
perform pursuant to paragraph 6. The subsequent events procedures that the auditor performs
may, however, depend on the information that is available and, in particular, the extent to
which the accounting records have been prepared since the date of the financial statements.
When the accounting records are not up-to-date, and accordingly no interim financial
statements (whether for internal or external purposes) have been prepared, or minutes of
meetings of management or those charged with governance have not been prepared, relevant
audit procedures may take the form of inspection of available books and records, including
bank statements. Paragraph A8 gives examples of some of the additional matters that the
auditor may consider in the course of these inquiries.
A8. In addition to the audit procedures required by paragraph 7, the auditor may consider it
necessary and appropriate to:
1. Read the entity’s latest available budgets, cash flow forecasts and other related management
reports for periods after the date of the financial statements;
2. Inquire, or extend previous oral or written inquiries, of the entity’s legal counsel concerning
litigation and claims; or
3. Consider whether written representations covering particular subsequent events may be
necessary to support other audit evidence and thereby obtain sufficient appropriate audit evidence.

Inquiry (Ref. Para. 7(b))

A9. In inquiring of management and, where appropriate, those charged with governance, as to
whether any subsequent events have occurred that might affect the financial statements, the
auditor may inquire as to the current status of items that were accounted for on the basis of
preliminary or inconclusive data and may make specific inquiries about the following
matters:
1. Whether new commitments, borrowings or guarantees have been entered into.
2. Whether sales or acquisitions of assets have occurred or are planned.
3. Whether there have been increases in capital or issuance of debt instruments, such as the
issue of new shares or debentures, or an agreement to merge or liquidate has been made or is
planned.
4. Whether any assets have been appropriated by government or destroyed, for example, by fire
or flood.

10 INTERNATIONAL STANDARD ON AUDITING 560 (REDRAFTED)

7 [Proposed] ISA 210 (Redrafted), “Agreeing the Terms of Audit Engagements,” paragraph [A23].
1. Whether there have been any developments regarding contingencies.
2. Whether any unusual accounting adjustments have been made or are contemplated.
3. Whether any events have occurred or are likely to occur that will bring into question the
appropriateness of accounting policies used in the financial statements, as would be the case, for
example, if such events call into question the validity of the going concern assumption.
4. Whether any events have occurred that are relevant to the measurement of estimates or
provisions made in the financial statements.
5. Whether any events have occurred that are relevant to the recoverability of assets.

Reading Minutes (Ref. Para. 7(c))

Considerations Specific to Public Sector Entities
A10. In the public sector, the auditor may read the official records of relevant proceedings of the
legislature and inquire about matters addressed in proceedings for which official records are
not yet available.

Facts Which Become Known to the Auditor After the Date of the Auditor’s Report but Before
the Date the Financial Statements are Issued
Management Responsibility Towards Auditor (Ref: Para. 10)
A11. As agreed in the terms of the audit engagement, management has a responsibility to inform
the auditor of relevant facts of which it becomes aware during the period from the date of the
auditor’s report to the date the financial statements are issued.7

Dual Dating (Ref: Para. 12(a))

A12. When, in the circumstances described in paragraph 12(a), the auditor amends the auditor’s
report to include an additional date restricted to that amendment, the date of the auditor’s
report on the financial statements prior to their subsequent amendment by management
remains unchanged because this date informs the reader as to when the audit work on those
financial statements was completed. However, an additional date is included in the auditor’s
report to inform users that the auditor’s procedures subsequent to that date were restricted to
the subsequent amendment of the financial statements. The following is an illustration of
such an additional date:
“(Date of auditor’s report), except as to Note Y, which is as of (date of completion of
audit procedures restricted to amendment described in Note Y).”

No Amendment of Financial Statements by Management (Ref: Para. 13)

A13. In some jurisdictions, management may not be required by law, regulation or the financial
reporting framework to issue amended financial statements. This is often the
11 INTERNATIONAL STANDARD ON AUDITING 560 (REDRAFTED) 12
 case when issuance of the financial statements for the following period is imminent, provided
appropriate disclosures are made in such statements.

Considerations Specific to Public Sector Entities

A14. In the public sector, the actions taken in accordance with paragraph 13 when management
does not amend the financial statements may also include reporting separately to the
legislature, or other relevant body in the reporting hierarchy, on the implications of the
subsequent event for the financial statements and the auditor’s report.

Auditor Action to Seek to Prevent Reliance on Auditor’s Report (Ref: Para. 13(b))
A15. The auditor may need to fulfill additional legal obligations even when the auditor has notified
management not to issue the financial statements and management has agreed to this request.
A16. When management has issued the financial statements despite the auditor’s notification not to
issue the financial statements to third parties, the auditor’s course of action to prevent
reliance on the auditor’s report on the financial statements depends upon the auditor’s legal
rights and obligations. Consequently, the auditor may consider it appropriate to seek legal
advice.

Facts Which Become Known to the Auditor After the Financial Statements have been Issued
No Amendment of Financial Statements by Management (Ref: Para. 15)
Considerations Specific to Public Sector Entities
A17. In some jurisdictions, entities in the public sector may be prevented from issuing amended
financial statements by law or regulation. In such circumstances, the appropriate course of
action for the auditor may be to report to the appropriate statutory body.

Auditor Action to Seek to Prevent Reliance on Auditor’s Report (Ref: Para. 17)
A18. When the auditor believes that management, or those charged with governance, have failed to
take the necessary steps to prevent reliance on the auditor’s report on financial statements
previously issued by the entity despite the auditor’s prior notification that the auditor will
take action to seek to prevent such reliance, the auditor’s course of action depends upon the
auditor’s legal rights and obligations. Consequently, the auditor may consider it appropriate
to seek legal advice.
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