Subsequent events - some worked examples

[@raphaelmunyui3509]

No better way to explain subsequent events. Excellent

[@satisfaxn]

Hi Amanda, I got pass in my Audit because of you😊🙏. Thank you You have the quality that we need in teacher. “ simple and clear 😊 Thank you again

[@amandalovestoaudit]

This is so great to hear - congratulations!

[@joesydney3646]

It depends some of us are first learners others middle learners others slow learners as for i have never attended classes for my ACCA i only stick with my PC at home😊

[@tebutiakiamoti2023]

Hi Amanda, you have really made auditing extremely easier than it is taught. I wanna thank you for all the videos you upload............it brings a lot of great benefit as an accounting major student. God Bless!

[@amandalovestoaudit]

Thank you!

[@fallajalfallaj4286]

you are the best Dr. Amanda

[@amandalovestoaudit]

Thank you!

[@gaziransomed6377]

Amanda,thank you so much for these videos ,you ve greatly helped me understand Audit way much better. i am going into an exam in30 minutes. thank you God bless you. ZAMBIA

[@andrit9668]

Hi Amanda, Thank you for your great explanation. I want to know if the fire occurred after Audit report was signed but before financial report was released, do we need to disclose it?

[@amandalovestoaudit]

Hi Andrew - no - because we couldn't have known about it at the time we signed our audit report :)

[@andrit9668]

Hi Amanda, Thank you for your reply. looking at your b example, you mentioned a disclosure is required, where should disclosure be made? Audit report or Fin Report or both? Thanks again for addressing my question.

[@amandalovestoaudit]

We can request the client make a disclosure in the notes to the accounts and we can choose to disclose in our opinion in an EOM

[@casdessers9105]

So what would happen if management accepts making changes to their statements but the audit opinion was qualified, will the auditor then maintain this opinion? And more interesting, if the auditor made a qualified opinion, and management does not want to adjust subsequent events that happened before the signing of the report, does the auditor then change his opinion to an adverse opinion?

[@amandalovestoaudit]

Hi Cas - if mgmt accepts your requested changes, you can retract and re-issue your opinion. Remember the opinion is given after we evaluate all of the subsequent event disclosures - not before.

[@casdessers9105]

@@amandalovestoaudit great answer! Thanks

[@commandershi8368]

Hi Amanda I used ur way to work this question out. But I will get a different answer! If client sell something faulty during the year and get sued up in period 2, what should we do. Answer says it is non adjusting event and shall be disclose as a note. But if I use ur methods, then in period Two, auditors cannot know that he will get sued so he will do nothing. Where wrong? Thx

[@amandalovestoaudit]

Hi Xiangyli - if they sold something faulty during the FY, then the originating event must be in the FY in question. If they discover it in period 2, then yes - it is likely the auditor could have found out about it during period 1. This is because lawsuits do not simply pop up out of the blue. A customer will lodge a complaint with management, or perhaps the govt. The customer often threatens to sue and mgmt/the board would have discussed it in their board meetings. Therefore the auditor would have discovered it in the meeting minutes. Lawsuits are typically contingent liabilities - so then you’d need to have a disclosure 😊 Does that make sense?

[@MrHada007]

can i get ur email id please

[@ibrahimahmad5161]

Very helpful keep it up. Thanks!!!

[@commandershi8368]

Hi Amanda I understand why fire is non adjusting, but I think fire should be disclosed as a note there. Why u didn’t do it. Thx

[@amandalovestoaudit]

It would depend on the severity. For example, in the case of this company - the fire is pretty significant and a disclosure would be warranted because it has a major effect on the business. kzbin.info/www/bejne/hX6VpWqPib-Hg6M If it was smaller, and had less (or no) impact on going concern etc, you could choose not to disclose

[@2F098]

The choppiness actually made me slightly motion sick... but amazing video! Really helped me understand the material better.

[@stonededge]

Hi Amanda. Quick question in regards to natural disasters. If the natural disaster was a tornado and occurred before the end of the financial year, would this be considered a type 2 or type 1 event? You mentioned that the warehouse fire is Type 1(adjusting). I understand that if the natural disaster occurred after the financial year it would be non-adjusting, however. :D please let me know

[@amandalovestoaudit]

+Benjamin Todd Hi Ben! If the tornado was before the EOFY, it would be a Type 1 :)

[@ismailakunpreneur3133]

hello amanda, can we do subsequent event when the financial statement doesn't closing (Final) yet.

[@amandalovestoaudit]

No - you can only consider them after the end of the year. It is usually done close to the signing of the audit report

[@shinee091291]

Hi! I got a question for you. Why is it that when the fire occurred on 17 July (after FYE,before audit report was signed), this event is considered non adjusting event whereas when the account receivable went bankrupt on 10 Aug(also after FYE, before audit report was signed) this event is considered as adjusting event? Hope to hear from you!

[@amandalovestoaudit]

Hi Nang It is because A/R are forward looking - they are telling us the amount of money we should be able to collect in the future. So if at the date we prepare our report we know about something that would affect it - we have to adjust. However with inventory - it either exists at the balance date or it doesn’t.

[@TySteve539]

5 years later, new editions same questions 😃🤷‍♂️

[@dabba9998]

Is the video laggy??

[@amandalovestoaudit]

It shouldn’t be

[@dabba9998]

@@amandalovestoaudit Can you make a video on "using the work of internal auditors"

[@chibuzookoye8019]

Well explained

[@tammypam3835]

Hi Amanda , You videos are excellent, short and sweet, could you give some example how to link materiality with users of financial statement. I have my exam in three days. Thanks a lot.

[@preciousannecantaros]

Thank you very much for this video, Ms. Amanda!! I learned a lot about auditing from your videos and my instructors love using your videos to explain auditing to us. Also, may I share this here? Pleaseeeee 🥺 "They replied, “Believe in the Lord Jesus, and you will be saved-you and your household.”" -Acts 16:31 Let us repent of our sins and trust in Jesus Christ who died for us all so we could be saved (only those who believes in Jesus Christ and obeys Him will be saved) Thank you po!!! 💖💖💖 God bless you!!

[@livial2081]

hello Amanda, can u make video about 'director declaration' & 'APES110' in audit really confused . THANK YOU A LOT

[@samy18205]

Hi Amanda, I don't know if you going to see this soon enough because I am writing in two days. I wana ask there is this question that you often use: Could the auditor have known about it ? what does this mean, because I keep interpreting this from the standard as if it means : If the auditor could have found out about this before this date, would it had have an any impact on his opinion ?. and this results to a different conclusion i.e part C. Even though the auditor couldn't have known it but if he could have known it would have made an impact to his opinion as the Inventory will mean that is overstated. Now you see there conclusion I end up with is different from the correct one. Please help even if you see this later it will just help me next year. Thank again for you time

[@Johndoe205525]

Typically for the purposes of most textbook problems you can safely assume that the auditor could have known. If you notice, they give you the information right then and there. If this information was unavailable it would have been a scope limitation. Auditors find out through various mediums and that includes inquiries of management, news, confirmations from other institutions who do business with the client (Usually a debtor or someone who owes money to the client being audited), or correspondence with their legal counsel. Of course this list I provide isn't comprehensive but I hope I gave you a better illustration of what to expect. Your textbook should discuss how auditors gather information on subsequent events as well and would recommend you review it. The exercises you perform in the textbooks at school eliminate the need for you to perform any of the prior steps to gather information regarding subsequent events. The purpose for this is to establish an understanding with students as to what a subsequent event is and whether additional adjustments or disclosures are needed considering the time frame. Don't overthink this and take the statement at face value (for the purposes of this example). To make a list (Because people are lazy and want lists) you should: 1.) Assume the auditor performed their due diligence (Unless otherwise stated on the assignment) 2.) Draw a timeline 3.) Mark the appropriate points to illustrate where the event takes place as well as Balance sheet date and auditor sign report. 4.) Apply the decision tree (Also applies to US GAAP for those curious) & exercise your best professional judgement with the given facts. 5.) $$$$