Subsequent Events (AS 4 | SA 560 | IND-AS 10)
KORAH AND KORAH, CHARTERED ACCOUNTANTS
AS 4 – Contingencies & Events Occurring After the BS Date
- Events occurring after BS date (BS to FS signing)
- Adjusting Events (impacting FS)
- Non-Adjusting Events (just disclose in DR)
- Non-Adjusting Events affecting GC (deemed as adjusting events)
SA 560 – Subsequent Events (SE)
- SE (BS to FS signing & afterwards)
- Audit Procedures for SE
- Facts known after AR but before FS is issued
- Facts known after FS is issued
A Better Understanding – AS 4 & SA 560

Insolvency of a customer which indicates a loss in trade receivables is an adjusting event
It confirms to a condition existing on BS date
AS 4 & SA 560

Destruction of a major production plant by fire is a non-adjusting event
Does not confirm to a condition existing on BS date
BASIC AUDIT PROCEDURES (SA 560)
- To obtain SAAE on whether all events between BS date and date of Audit Report require adjustments (if AE) or just disclosures (if NAE)
- Review the mgmt procedures
- Make inquiries
- Read minutes
- Mgmt reports
- Mgmt representation
- Respond to facts that become known after the date of Audit Report
- Extend the above
- Inquire how mgmt intends to address the matter in FS
DEALING WITH COVID-19
Managements’s Considerations
- They should exercise judgment in determining the impacts on FS from SE’s (adjusting events) in the wake of COVID-19
- To issue a written representation that they have identified all events occurring between FS date and AR date which require adjustments/disclosures
Auditor’s Responsibilities
- Obtaining an understanding of the SE’s and how it has been dealt with in FS.
- Judgment needs to be applied to determine whether the conditions existed on the FS date (adjusting events) or not.
- Ongoing and regular communication with TCWG – improve understanding of the changes that need responses and also to determine the audit procedures for SAAE.
Examples of Events & Conditions that May be Relevant in the Current Environment*
SECURED LOANS
New commitments and borrowings as a result of the pandemic
FIXED ASSETS
Recent or planned sales and acquisitions of assets as a result of the pandemic
DEBTORS
Expected credit loss provisioning – customers in USA/UK having already filed for liquidaton
GOVT. RELIEFS
Important to understand & determine the conditions and the dates attached
*May require adjustments to FS
REPORTING RESPONSIBILITIES
If the auditor is able to obtain SAAE about SE’s as required in SA 560, then he has 2 options:
- If he considers that the SE’s identified require user’s attention, then uder KAM paragraph (Key Audit Matters)
OR
- If it is not necessary to draw the user’s attention, then under EOM / OM paragraph (Emphasis of Matter/Other Matter)