Finding Subsequent Events

There are several procedures that help auditors find and evaluate subsequent events. These include:

1. Reading and comparing the most recent financial statements to the statements under audit. Obtain client explanations for significant fluctuations.

2. Discussing with executive management:
a. how contingent liabilities were estimated at year-end and if they have been paid subsequent to year-end.
b. if any significant events have occurred after year-end.
c. if any unusual adjustments were made after year-end.
d. if there were any significant changes in long-term debt or significant purchases after year-end.

3. Reading the minutes from board meetings held after year-end.

4. Reading any meeting agendas and summaries of actions for minutes that have not been approved.

5. Reviewing confirmations from legal counsel concerning litigation, claims and assessments.

6. Obtaining a written representation letter from management clarifying any unusual issues or transactions.

7. And when all else fails…perform any other procedures that the auditor considers necessary and appropriate to dispose of any unanswered questions.

So when the auditor asks the CFO for interim financial statements, this is one of the procedures for identifying a subsequent event that could impact the financial statements under audit.

Now you know!

For more information, see events.

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