Responsibilities of Auditor regarding Post Balance Sheet Events and Transactions

Responsibilities of Auditor regarding Post Balance Sheet Events and Transactions

Responsibilities of the Auditor regarding the post balance sheet events and transactions

An Auditor is a person or a firm appointed by a company to execute an audit. The auditor’s job is to write a report at the conclusion of the audit which determines the level of accuracy and clarity that the organization has accounted for.

Events after the balance sheet date are those events, favorable and unfavorable, that occur between the balance sheet date and the date when the financial statements are authorized for issue. Post balance sheet events are something that occurs after a reporting stage, but before the financial statements for that period has been issued or is accessible to be issued.

Post audit responsibilities include consideration of-

(a) Subsequent events between report date and issuance of audit report:

  • If knowledge of Type I events comes to the auditor’s attention, the auditor might consider performing additional procedures and relating the report.
  • If knowledge of such events comes to the auditor attention the auditor might consider dual dating the report for Type II subsequent events.

(b) Discovery of Facts Existing at Report Date:

  • Investigate issues if they might be material to the financial statements.
  • Hopefully, the client will issue a revised report and auditor will issue a revised opinion.
  • If the client refuses to disclose newly discovered facts.
  • Notify the client that the audit report must no longer be associated with the financial statement.
  • Notify the regulatory agencies having jurisdiction over the client that the report should no longer be relied upon.
  • Notify (often via a regulatory agency) each individual known to be relying on the financial statements that the report can no longer be relied upon.

(c) Discovery of Omitted Audit Procedures

  • May happen as a result of peer review,
  • Assess the importance of omitted procedure,
  • Perform omitted procedures if the opinion cannot be supported by audit procedures initially performed,
  • Determine if that is a subsequent discovery of facts that existed at report date.