## SA-560: Subsequent Events

### Objective

a. Obtain sufficient appropriate audit evidence about subsequent events between the date of financial statements and the date of the auditor's report that require adjustment — to ensure they are appropriately reflected in the FS

b. Respond appropriately to facts that become known after the date of the auditor's report that may have caused the auditor to amend the report

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### Definition of Subsequent Events

Two categories of subsequent events:

Category	Description
Type 1	Events occurring after the date of FS but before the date of the auditor's report
Type 2	Facts that came to the knowledge of the auditor after the date of the auditor's report

> Note: This extract covers the definition and objective of SA-560. The standard's detailed procedures for each category — including adjusting vs. non-adjusting events, dual-dating, and reporting implications — are addressed in the full standard.

Worked example

### Example 1

Type 1 Subsequent Event: A company's balance sheet date is 31 March. On 15 April (before the audit report is signed on 30 April), a major customer files for insolvency. The auditor must assess whether the year-end trade receivable balance requires a write-down. This is a Type 1 subsequent event — it occurred after the FS date but before the audit report date and requires adjustment.

### Example 2

Type 2 Subsequent Event: The auditor signs the report on 30 April. On 10 May (after the report is signed), the auditor learns that a significant fraud was perpetrated before the year-end. This is a Type 2 fact — it became known after the audit report date. The auditor must assess whether to amend the report and what steps to take in consultation with TCWG and legal counsel.

⚠️ Common exam mistakes

Confusing 'subsequent events' with only Type 1 events — the standard covers both events before the report date AND facts discovered after the report date.
Treating all post-balance-sheet events as requiring adjustment — only events that provide evidence of conditions existing at the balance sheet date require adjustment (adjusting events); events indicating new conditions after the balance sheet date require disclosure only.

Reference: SA-560 — Standards on Auditing — ICAI

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