Advanced Auditing, Assurance and Professional Ethics · Completion and Review

Facts Known After Financial Statements Are Issued (SA 560)

Updated 5 October 2026 · Fact-checked

Under SA 560, if you learn after issue that a fact existed at the report date and would have changed your report, you discuss it with management and those charged with governance, decide if the financial statements need amendment, and act. If management refuses, you try to prevent reliance. Facts arising after the report date do not trigger this duty.

Understand Facts Known After Financial Statements Are Issued

Your report is dated. Once the financial statements and your report are issued to users, you have no duty to perform any further audit procedures on them. That is the starting point of SA 560 for this stage.

But sometimes you come to know of a fact after issue. The fact must have existed at the date of the auditor's report, and if you had known it then, it might have caused you to amend the report. Examples: a large debtor was already insolvent at the balance sheet date, or a pending litigation outcome clarifies a condition that existed earlier. A fact that arose after the report date, such as a fire in a later month, does not trigger this duty, because it did not exist at the report date. After issue you have no obligation to perform procedures on the statements, so you do not look for such events.

When this happens, you must act. You discuss the matter with management and, where appropriate, those charged with governance. You decide whether the financial statements need amendment. If they do, you ask management how they plan to deal with it in the financial statements.

If management amends the statements, you carry out the audit procedures needed on the amendment. You review the steps management took to inform everyone who received the earlier statements. You then issue a new auditor's report on the amended statements. The new report carries a new date, and normally includes an Emphasis of Matter or Other Matter paragraph referring to the note that explains the amendment and to your earlier report.

If management does not amend the statements, or does not take steps to inform users, and you think the statements need amendment, you notify management and those charged with governance that you will seek to prevent future reliance on your report. If the statements are still not amended and users are not informed, you take appropriate action to prevent reliance. What that action is depends on your legal rights and obligations, so you often take legal advice. Depending on that advice, the action may include withdrawing from the engagement or resigning.

Key rules to remember

Trigger condition: Fact becomes known after FS issued + fact existed at report date + might have led to amended report; All three conditions must hold. If the fact arose after the report date, this duty does not apply and you have no obligation to perform procedures after issue.
Duty to act: Discuss with management / TCWG → decide if FS need amendment → inquire how management will address it; Applies to facts known after issue. You do not need to search for such facts; there is no duty to perform procedures after issue.
If management amends: Procedures on the amendment + review management's steps to inform users + extend the procedures in paras 6-9 to the date of the new report + new report (new date) + EOM/OM paragraph; You extend the procedures in paras 6-9 of SA 560 to the date of the new report. The new report must not be dated earlier than the date the amended financial statements are approved.
If management does not amend: Notify management and TCWG → if no action, take appropriate steps to prevent reliance on the report; Seek legal advice on the steps you can take. Depending on that advice, these may include withdrawing from the engagement or resigning.
Duty after issue: No obligation to perform procedures on FS after issue; The duty arises only when you come to know of the fact.

How to solve Facts Known After Financial Statements Are Issued questions

Use this order for any question on facts known after the financial statements are issued. Write the answer in provision, facts and conclusion form.

1Fix the dates: financial statements issue date, auditor's report date, and the date you came to know the fact.
2Check the timing of the fact itself. Did it exist at the report date? If it arose later, the SA 560 post-issue duty does not apply and you have no duty to perform procedures after issue.
3Check the effect: would it have caused you to amend the report? If not material, no action is needed.
4State the first duty: discuss with management and, where appropriate, those charged with governance, and decide whether the statements need amendment.
5If management amends: perform procedures on the amendment, review its steps to inform users, extend the procedures in paras 6-9 to the date of the new report, and issue a new report with a new date and an EOM or OM paragraph.
6If management does not amend or inform users: notify management and TCWG that you will seek to prevent reliance, and then take appropriate action, with legal advice. This may include withdrawing from the engagement or resigning.
7Conclude clearly with what the auditor should do in the given facts.

Quickest way: Three-question check

When to use it: Use in MCQs and short written answers where time is tight.

Q1: Did the fact exist at the report date? No means the SA 560 post-issue duty does not apply; you have no duty to perform procedures after issue.
Q2: Would it have changed my report? No means no action.
Q3: Did management amend and inform users? Yes means new report with new date and EOM or OM. No means notify management and TCWG, then act to prevent reliance.

Common mistakes in Facts Known After Financial Statements Are Issued

Saying the auditor must keep checking for new facts after the FS are issued.
Students mix this with the duty for events up to the report date.
Fix: State that there is no obligation to perform procedures after issue. The duty starts only when you come to know of a fact.
Applying this rule to an event that occurred after the report date.
The word 'subsequent' makes every later event look the same.
Fix: Check that the fact existed at the report date. The post-issue duty applies only to such facts. For a later event, the auditor has no duty to perform procedures after issue.
Issuing the new report with the old date.
Students think only the amendment changes, not the report.
Fix: The new report carries a new date, not earlier than the date the amended statements are approved. Extend the procedures in paras 6-9 to the date of the new report.
Forgetting to review management's steps to inform users of the earlier statements.
Focus stays on the amended numbers.
Fix: Always include review of the steps taken to inform those who received the earlier statements.
Skipping the notification to management and TCWG when management refuses to act.
Students jump to the final step.
Fix: First notify management and TCWG that you will seek to prevent reliance. If they still do not act, take appropriate action based on your legal rights and obligations and legal advice. Depending on that advice, this may include withdrawing from the engagement or resigning.
Omitting the discussion with management and TCWG as the first step.
Students go straight to issuing a new report.
Fix: Start with the discussion and the decision whether the statements need amendment.

Worked examples

Example 1

Case: ABC Ltd's financial statements for the year ended 31 March were signed with the auditor's report on 20 May and issued to members on 10 June. On 5 July, the auditor learns that a major customer owing ₹80,00,000 had been declared insolvent on 15 March, and no provision was made. The amount is material. Management agrees to amend the statements and informs the members. What should the auditor do?

Show the solution

Dates: report 20 May, issued 10 June, fact learned 5 July.
Timing: the insolvency was on 15 March, before the report date. The fact existed at the report date.
Effect: the ₹80,00,000 is material and would have led to an amended report, so SA 560 applies.
The auditor discusses the matter with management and TCWG and confirms that the statements need amendment, and asks how management will deal with it.
Management amends. The auditor performs procedures on the amendment and reviews the steps management has taken to inform the members who got the earlier statements.
The auditor issues a new report on the amended statements with a new date and includes an EOM or OM paragraph referring to the note explaining the amendment and to the earlier report.

Answer: The auditor must discuss with management and TCWG, perform procedures on the amendment, review steps to inform users, and issue a new report with a new date and an EOM or OM paragraph.

Example 2

Case: After issue of the statements of XYZ Ltd, the auditor learns that inventory included goods already sold and delivered before year end, overstating profit materially. The board refuses to amend the statements or inform shareholders. What are the auditor's duties?

Show the solution

Timing: the sales were before year end, so the fact existed at the report date.
Effect: overstated profit is material, so the report might have been amended.
The auditor first discusses the matter with management and TCWG and concludes the statements need amendment.
Management does not amend or inform users, so the auditor notifies management and TCWG that he will seek to prevent future reliance on the report.
If there is still no amendment or action, the auditor takes appropriate action to prevent reliance on the report. This depends on his legal rights and obligations, so he takes legal advice. Depending on that advice, the action may include withdrawing from the engagement or resigning.

Answer: The auditor notifies management and TCWG that he will seek to prevent reliance on his report, and if they do not act, takes appropriate steps to prevent reliance, based on legal advice. Depending on that advice, this may include withdrawing from the engagement or resigning.

Exam tips

Always mention the three conditions: known after issue, existed at the report date, and might have changed the report. Marks are given for this.
Write the two branches clearly: management amends, and management does not amend. Examiners test both.
For the new report, mention the new date and the EOM or OM paragraph. These are easy marks that students miss.
In MCQs, check whether the fact existed at the report date. Many options test only this distinction.
Cite SA 560, and the paragraph number only if you are sure of it.

Practice questions from Completion and Review

Facts Known After Financial Statements Are Issued: frequently asked questions

Does the auditor have to look for facts after the financial statements are issued?

No. SA 560 says the auditor has no obligation to perform any audit procedures on the financial statements after they are issued. The duty starts only when the auditor comes to know of a relevant fact.

What is the difference between this and facts known after the report date but before issue?

Before issue (paras 10 to 13 of SA 560), the auditor can still deal with the matter through the financial statements and the report. If management does not amend and the auditor thinks the statements should be amended, the auditor modifies the opinion and then issues the report. After issue, the statements are already with users, so the focus is on informing users and preventing reliance on the report.

What if management does not amend the financial statements after issue?

The auditor notifies management and those charged with governance that he will seek to prevent future reliance on the report. If they still do not act, he takes appropriate action to prevent reliance, depending on his legal rights and obligations. With legal advice, this may include withdrawing from the engagement or resigning.

Should the new auditor's report have a new date?

Yes. The new report must not be dated earlier than the approval of the amended financial statements, and you extend the procedures in paras 6-9 to its date. It normally includes an Emphasis of Matter or Other Matter paragraph referring to the note on the amendment and the earlier report.