Audit and Assurance · Subsequent events

Facts Discovered After the Auditor's Report Date (ISA 560)

Updated 11 October 2026

Under ISA 560, the auditor has no duty to search for facts after the report date. If one comes to light that would have changed the report, the auditor discusses it with management, decides if the financial statements need amending, and acts. What you do depends on whether the statements have been issued.

Understand Facts Discovered After the Report Date

A subsequent event is an event that occurs after the date of the financial statements. ISA 560 defines the events it covers as those occurring between the date of the financial statements and the date of the auditor's report. It also covers facts discovered after the report date.

IAS 10 and ISA 560 do not share a cut-off. IAS 10 runs to the date the statements are authorised for issue. ISA 560 uses the report date, and then the date the statements are issued. Do not treat these as the same date. "Authorised for issue" is an IAS 10 date set by management. "Issued" is the ISA 560 date when the statements and report are made available to third parties.

These two ISA 560 cut-offs give three periods. You must know which period a question sits in.

Period 1: up to the date of the auditor's report. The auditor must perform procedures to find events needing adjustment or disclosure. This is an active duty.

Period 2: after the report date but before the financial statements are issued. The auditor has no duty to perform procedures. Management is responsible for telling the auditor of any fact that may be material. If the auditor learns of such a fact, the auditor must discuss it with management and decide if the statements need amending.

Period 3: after the financial statements are issued. Again, there is no duty to perform procedures. But if the auditor becomes aware of a fact that, had it been known at the date of the report, may have caused the auditor to amend the report, the same discussion applies. The auditor must also consider whether the statements need amending.

The key idea: the auditor is responsible for the report at its date. Later facts matter only if they existed at that date and are material. The auditor reacts to them. The auditor does not go looking.

Key rules to remember

Period 1 duty: Financial statements date → report date: auditor MUST perform procedures; Reviews of minutes, latest management accounts, legal matters, and inquiries of management.
Period 2 duty: Report date → issue date: NO duty to inquire; management must inform the auditor; Auditor acts if aware of a fact that may be material.
Period 3 duty: After issue: NO duty to inquire; act if aware of a fact that may have changed the report; Applies only if the fact existed at the report date.
If management amends (periods 2 and 3): Extend procedures to the new date → issue a new or amended report; The new report date is no earlier than approval of the amended statements.
If management will not amend (period 2, report not yet provided to the entity): Modify the opinion (qualified or adverse) → then provide the report; The modification applies only where the report has not yet been provided to the entity.
If management will not amend (period 2, report already provided to the entity): Notify management and those charged with governance not to issue the statements to third parties until the amendments are made; If the statements are issued anyway, the auditor takes appropriate action to seek to prevent reliance on the report.
If management will not amend (after issue): Notify management and those charged with governance that the auditor will take action to seek to prevent future reliance on the report → take that action; Action may include seeking legal advice. Confidentiality limits apply.

How to solve Facts Discovered After the Report Date questions

Use this order for any question on facts discovered after the report date.

1Fix the timeline. Find the year-end, the report date and whether the financial statements have been issued.
2Decide which period the discovery falls in. This tells you whether the auditor had a duty to look.
3Ask if the fact existed at the report date and if it is material. If not, it is usually not a problem for the report.
4State the first action: discuss the matter with management and those charged with governance.
5Say what happens if management amends: extend procedures to the new report date and issue a new or amended report.
6Say what happens if management refuses: modify the opinion before issue, or take steps to prevent reliance after issue.
7Mention consideration of legal advice, and of the auditor's ethical duties on confidentiality.
8Link to the opinion type: material but not pervasive means qualified; pervasive means adverse.

Quickest way: Three-line timeline check

When to use it: Use in Section A or B objective questions, and to plan the opening of a Section C answer.

Write three labels: before report date, report date to issue, after issue.
Mark where the fact appears. Only the first label carries a duty to search.
Choose the action: discuss with management, then amend or modify. If after issue and management refuses, stop reliance.

Common mistakes in Facts Discovered After the Report Date

Saying the auditor must perform procedures to look for events after the report date.
Students mix up the active duty before the report date with the reactive duty after it.
Fix: Remember: duty to search ends at the report date. After that, the auditor only responds to what they learn.
Ignoring management and going straight to a modified opinion.
Students jump to the outcome without the process.
Fix: Always start with discussion with management and those charged with governance.
Treating any later fact as relevant.
Students overlook the condition that the fact must have existed at the report date.
Fix: Check that the fact relates to conditions that existed at the report date and that it is material.
Forgetting to extend procedures when new statements are issued.
Students stop at 'issue a new report'.
Fix: State that procedures are extended to the date of the new report, and that the new report is dated no earlier than approval of the amended statements.
Giving a modified opinion on statements already issued.
Students confuse the options before and after issue.
Fix: After issue, the auditor cannot modify a report already given. They notify management and those charged with governance that action will be taken to seek to prevent future reliance on the report, and then take that action.
Not distinguishing adjusting from non-adjusting events.
IAS 10 rules and ISA 560 duties are studied apart.
Fix: Adjusting events give evidence of conditions at the year-end and require amendment. Non-adjusting events need disclosure only if material.

Worked examples

Example 1

Year-end is 31 December. The auditor signed the report on 20 March. The financial statements are due to be issued on 10 April. On 28 March the auditor learns that a major customer, owing 40% of receivables, went into liquidation on 25 March. The customer's financial difficulties arose from conditions that existed at the year-end. Management has not provided for the debt. Explain what the auditor should do.

Show the solution

Timeline: the liquidation and the auditor's discovery are both after the report date (20 March) but before issue (10 April). This is period 2.
The auditor had no duty to search for it. But now aware of it, the auditor must act, because the customer's insolvency arose from conditions existing at the year-end and is likely material.
Discuss the matter with management and those charged with governance.
If management amends the statements, the auditor extends procedures to the date of the new report and issues a new report dated no earlier than approval of the amended statements.
If management refuses to amend and the report has not yet been provided to the entity, the auditor modifies the opinion and then provides the report. A qualified opinion applies if the effect is material but not pervasive. Adverse applies if pervasive.
If management refuses and the report has already been provided to the entity, the auditor notifies management and those charged with governance not to issue the unamended statements to third parties until the amendments are made. If they are issued anyway, the auditor takes appropriate action to seek to prevent reliance on the report. The auditor may seek legal advice.

Answer: Discuss with management. If they amend, extend procedures and issue a new report. If they refuse and the report has not yet been provided to the entity, modify the opinion (qualified or adverse depending on pervasiveness) and then provide the report. If they refuse and the report has already been provided, notify management and those charged with governance not to issue the statements to third parties until they are amended. If they are issued anyway, take appropriate action to seek to prevent reliance on the report.

Example 2

The financial statements were issued with an unmodified report. Two weeks later, the auditor learns that inventory at the year-end included items that were obsolete. The effect is material. Management says it will not amend the statements. State the auditor's actions.

Show the solution

Timeline: after issue, so period 3. The auditor had no duty to search.
The fact existed at the year-end and is material. It may have caused the auditor to amend the report had it been known.
Discuss with management and those charged with governance.
Management refuses. The auditor notifies management and those charged with governance that action will be taken to seek to prevent future reliance on the report.
The auditor then takes that action, taking account of confidentiality duties. The auditor may seek legal advice on the proper action.

Answer: Notify management and those charged with governance that action will be taken to seek to prevent future reliance on the report, then take appropriate action, taking account of confidentiality. The auditor may seek legal advice.

Exam tips

Always state which period the fact falls into. Markers reward the timeline.
Use the order: discuss, then amend or refuse, then action. Skipping the first step loses marks.
Separate the 'before issue' answer (modify opinion) from the 'after issue' answer (prevent reliance).
In objective tests, look for the words 'no duty' for periods 2 and 3. These often appear in the correct option.
In Section C, tie the issue to the opinion type and justify materiality and pervasiveness with the figures given.

Facts Discovered After the Report Date: frequently asked questions

Does the auditor have to look for events after the report date?

No. ISA 560 requires procedures only up to the date of the auditor's report. After that date, the auditor has no duty to inquire but must act if made aware of a relevant fact.

What if management refuses to amend before the statements are issued?

It depends on whether the report has been provided to the entity. If it has not, the auditor modifies the opinion, as qualified or adverse depending on pervasiveness, and then provides the report. If it has already been provided, the auditor notifies management and those charged with governance not to issue the statements to third parties until the amendments are made. If they are issued anyway, the auditor takes appropriate action to seek to prevent reliance on the report.

What can the auditor do if the statements are already issued and management will not act?

The auditor notifies management and those charged with governance that action will be taken to prevent reliance. This may involve legal advice and consideration of confidentiality.

Is a new report dated the original date?

No. The new or amended report is dated no earlier than the date the amended financial statements are approved. Procedures are extended to that date.