1. GAAS requires auditors to investigate a subsequent event (see separate post.) What would be the effect of such an event, if any, on the dating of the opinion?
2. When it comes to subsequent events, the auditor is required by Generally Accepted Auditing Standards (GAAS) to search for and to evaluate subsequent events up to the date of the auditor’s report, that date usually corresponds to the end of field work. To comply with GAAS the auditor should remain alert for subsequent events in performing year-end substantive tests after the balance sheet date and should perform specific procedures at or near the completion of field work. What would be an example of such specific procedures? Explain
3. There are three general sets of activities that must be performed to complete an audit. These include completing field work, evaluating findings, and communicating with the client. As part of completing the field work, the auditor must make a review of subsequent events. Subsequent events are events that occur between the balance sheet date and the issuance date of the auditor’s report that may affect the financial statements on which the report is rendered. Such reviews 1) may provide additional evidence about conditions that existed at the date of the balance sheet and affect the estimates inherent in the process of preparing financial statements or 2) may provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date. How do you think each type of event would be addressed by the auditor?