19-23 - 19-23(Subsequent events G reen CPA is auditing the...

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19-23 (Subsequent events) Green, CPA, is auditing the financial statements of Taylor Corporation for the year ended December 31, 20X1. Green plans to complete the fieldwork and sign the auditor’s report about May 10, 20X2. Green is concerned about events and transactions occurring after December 31, 20X1, that may affect the 20X1 financial statements. Required a. What are the general types of subsequent events that require Green’s consideration and evaluation? There are two types of subsequent events; (1) Events that existed at the date of the balance sheet and events occurring up to the date of the Auditor's report and; (2) Events that provide evidence with respect to conditions that did not exist at the date of the balance sheet being reported on but arose subsequent to that date. Facts discovered after the date of the auditor's report but before the date the financial statements are issued, Facts discovered after the financial statements have been issued b. What are the auditing procedures Green should consider performing to gather evidence concerning subsequent events? The auditor should perform audit procedures designed to obtain sufficient appropriate audit evidence that all events up to the date of the auditor's report that may require adjustment of, or disclosure in, the financial statements have been identified: The auditor is required to perform following audit procedures: 1. Reviewing procedures management has established to ensure that subsequent events are identified. 2. Reading minutes of the meetings of shareholders, including established committees such as relevant executive committees and the audit committee, held after the date of financial statements and inquiring about matters discussed at meetings for which minutes are not yet available.
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3. Reading the entity's latest available financial statements and, as considered necessary and appropriate budgets, cash flow forecasts and other related management reports. 4. Inquiring, or extending previous oral or written inquiries, of the entity's legal counsel concerning litigation and claims. 5. Inquiring of management as to whether any subsequent events have occurred which might affect the financial statements. Examples of inquiries of management on specific matters are: 6. The current status of items that were accounted for on the basis of preliminary or inconclusive data 7. Whether new commitments or guarantees are entered into. 8.
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This note was uploaded on 02/22/2011 for the course ACCT 492 taught by Professor Urdank during the Fall '10 term at University of Phoenix.

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19-23 - 19-23(Subsequent events G reen CPA is auditing the...

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