Advanced Auditing, Assurance and Professional Ethics · Completion and Review

SA 560 Subsequent Events: Objective and Types

Updated 5 October 2026 · Fact-checked

Subsequent events are events occurring between the date of the financial statements and the date of the auditor's report, plus facts that become known to the auditor after that report date. Under SA 560, you obtain audit evidence on events up to the report date, check treatment under the applicable framework, and respond to later facts.

Understand SA 560 Subsequent Events: Objective and Types

Financial statements are drawn up as at a date, such as 31 March. But the books are not signed that day. Management finalises them weeks later, and the auditor signs the report later still. Things keep happening in this gap. A customer may go insolvent, a fire may destroy stock, or a court may decide a case. SA 560 tells you what to do about them.

SA 560 deals with the auditor's responsibilities for subsequent events. The term covers two kinds of items, distinguished by timing: events occurring between the date of the financial statements and the date of the auditor's report, and facts that become known to the auditor after the date of the auditor's report. The objective is to obtain sufficient appropriate audit evidence that events up to the date of the auditor's report, which need adjustment or disclosure, are properly reflected in the financial statements. It also requires you to respond properly to facts that become known after that date.

You must keep four dates apart. The date of the financial statements is the end of the latest period covered, for example 31 March 2027. The date of approval of the financial statements is when those with recognised authority, such as the board, state that they have prepared the complete financial statements, including related notes, and accept responsibility for them. The date of the auditor's report is the date you choose for your report. It must not be earlier than the date on which you have obtained sufficient appropriate audit evidence to support your opinion, including evidence that the financial statements have been prepared and those with recognised authority have asserted responsibility for them. The date the financial statements are issued is the date on which the auditor's report and audited financial statements are made available to third parties.

For the timeline you mainly use three of these: the date of the financial statements, the date of the auditor's report and the date of issue. The approval date matters because it limits how early you can date your report.

Do not confuse this timing split with the accounting classification. SA 560 does not itself classify events as adjusting or non-adjusting. It refers to the applicable financial reporting framework. Under Ind AS 10 (Events after the Reporting Period), adjusting events provide evidence of conditions that existed at the end of the reporting period, so amounts are adjusted. Non-adjusting events relate to conditions that arose after that date, so they are only disclosed if material. Your job is to check that management has applied the framework correctly. Insolvency of a customer after year end, whose debt was outstanding at year end, is typically adjusting. A fire loss after year end is non-adjusting.

The auditor has no duty to perform procedures after the date of the auditor's report to look for further events. But if you become aware of a fact that would have caused you to amend the report had you known it, SA 560 requires action. The responses differ by timing: up to the report date, after the report date but before issue, and after issue. This page covers the objective, the dates and the types. The three timing responses are covered in the related pages.

Key rules to remember

Events between FS date and report date (timing kind 1): Date of financial statements → Date of auditor's report; You must obtain sufficient appropriate audit evidence that events in this window needing adjustment or disclosure are properly reflected in the financial statements.
Facts after report date (timing kind 2): Window A: after report date, before issue → discuss with management and determine whether the financial statements need amendment; if management amends, extend procedures to the date of the new report and give a new or amended report; if not, modify the opinion or take other action as appropriate. Window B: after issue → discuss with management, take action as appropriate; You have no duty to perform procedures after the report date. But if a fact comes to your knowledge that would have changed the report, you must respond. Before issue, you discuss the matter with management, determine whether the statements need amendment, and inquire how management intends to address it. If management amends the statements, you extend your procedures to the date of the new report and give a new or amended report. If management does not amend and you believe it should, you modify the opinion or take other action as appropriate. After issue, you discuss the matter with management and take action as appropriate.
Report date limit: Date of auditor's report ≥ Date on which sufficient appropriate audit evidence is obtained; The report must not be dated earlier than the date you obtain sufficient appropriate audit evidence. This includes evidence that the financial statements have been prepared and that those with recognised authority have asserted responsibility for them.
Adjusting event (Ind AS 10): Evidence of condition existing at the balance sheet date → adjust amounts; Example: settlement of a court case after year end confirming a present obligation at year end.
Non-adjusting event (Ind AS 10): Condition arising after the balance sheet date → disclose if material; Example: major acquisition or fire loss after year end. No change in recognised amounts.

How to solve SA 560 Subsequent Events: Objective and Types questions

Use this sequence for any question on SA 560 and subsequent events. It keeps your answer in provision, facts and conclusion form.

1Write down the dates in the case: date of the financial statements, date of the auditor's report and date of issue, plus the approval date if given.
2Place the event on the timeline. Is it before the report date, after the report date but before issue, or after issue?
3State the SA 560 responsibility for that window, in one line.
4Classify the event under the applicable framework (Ind AS 10): does it give evidence of a condition existing at the year-end (adjusting) or arise afterwards (non-adjusting)?
5Apply the treatment: adjust the amounts, or disclose the nature and an estimate of financial effect, or both if needed.
6Check what audit procedures the auditor should have done, such as reading minutes, inquiring of management and reviewing latest interim statements.
7Conclude on the effect on the audit report: unmodified if properly handled, or modified opinion if management refuses to adjust or disclose a material item.
8Quote the standard's logic in plain words rather than guessing paragraph numbers.

Quickest way: Timeline-first method

When to use it: Use this when you have a short case MCQ or limited time for a descriptive answer.

Draw a line with three marks: balance sheet date, report date, issue date.
Mark where the event falls.
Ask one question: did the condition exist at the balance sheet date? If yes, adjusting; if no, non-adjusting.
Pick the matching auditor action: before report date, perform procedures and ensure proper treatment; after, discuss with management and respond if the report would have changed.
Write the conclusion in one line: opinion unchanged or modified.

Common mistakes in SA 560 Subsequent Events: Objective and Types

Treating the date of the financial statements and the date of the auditor's report as the same date.
Both are close together in practice, and students assume they coincide.
Fix: Remember the gap: the first is the period end, the second is when you sign. Subsequent events sit between them.
Saying the auditor must keep searching for events after signing the report.
Students confuse the duty up to the report date with the later period.
Fix: State that the auditor has no obligation to perform procedures after the report date, but must act on facts that come to knowledge.
Classifying an event as adjusting simply because it is large.
Size is mistaken for the test.
Fix: The test is whether it gives evidence of a condition existing at the balance sheet date. Size only affects materiality and disclosure.
Adjusting the figures for a non-adjusting event such as a post year-end fire.
Students focus on the loss amount rather than when the condition arose.
Fix: Do not change recognised amounts. Disclose the nature and estimated financial effect if material.
Dating the auditor's report before management has approved the financial statements.
Students want to sign when fieldwork ends.
Fix: The report date cannot precede the date you have sufficient appropriate evidence, including evidence of approval by those with recognised authority and their acceptance of responsibility.
Ignoring the date the financial statements are issued.
Questions often mention only two dates.
Fix: Always note the issue date, because the auditor's response to later facts depends on whether the statements have been issued.
Mixing up the two timing kinds of subsequent events with adjusting and non-adjusting events.
Both are described as 'types' of events.
Fix: Timing (before or after the report date) comes from SA 560. Adjusting or non-adjusting comes from the framework, Ind AS 10. Apply both separately.

Worked examples

Example 1

Case: Alpha Ltd has a financial year ended 31 March 2027. The auditor signs the report on 20 May 2027. On 5 May 2027, a major customer, whose ₹40,00,000 receivable was outstanding at 31 March 2027, was declared insolvent. Management has made no provision. Explain how the auditor should treat this under SA 560.

Show the solution

Dates: financial statements 31 March 2027; report 20 May 2027. The event on 5 May 2027 falls between them, so it is a subsequent event within SA 560's first window.
Classification: the receivable existed at year end and the insolvency confirms the customer's poor financial condition. The event gives evidence of a condition existing at the balance sheet date, so it is an adjusting event under Ind AS 10.
Treatment: the receivable should be written down or provided for to the extent not recoverable, in line with Ind AS 10 and the expected credit loss requirements.
Auditor's action: perform procedures to identify the event, discuss with management, and ask that the financial statements be adjusted.
Conclusion: if management adjusts, the report can be unmodified. If management refuses and the amount is material, the auditor expresses a qualified or adverse opinion depending on pervasiveness.

Answer: The insolvency is an adjusting event within the SA 560 window. The ₹40,00,000 receivable must be adjusted for the unrecoverable portion. If management refuses and the effect is material, the auditor modifies the opinion.

Example 2

Case: Beta Ltd has a year-end of 31 March 2027. The auditor's report is dated 25 May 2027. On 15 May 2027 a fire destroyed a warehouse, with an estimated loss of ₹2,50,00,000, which is material. The warehouse was in good condition at year end and the financial statements show no reference to the fire. What should the auditor do?

Show the solution

Dates: the fire on 15 May 2027 lies between 31 March 2027 and 25 May 2027, so it is a subsequent event.
Classification: the warehouse was intact at year end. The fire is a new condition arising after the balance sheet date, so it is a non-adjusting event under Ind AS 10.
Treatment: no adjustment to recognised amounts at 31 March 2027. Because the loss is material, disclosure of the nature of the event and an estimate of its financial effect is needed, as required by the applicable framework.
Auditor's action: obtain evidence on the event, such as inquiry of management and review of insurance position, and check that the disclosure note exists.
Conclusion: if the disclosure is made, the report is unmodified. If management omits this required material disclosure, the auditor expresses a qualified or adverse opinion, depending on pervasiveness. An Emphasis of Matter paragraph cannot replace a disclosure that management has omitted. It is used only where the matter is properly presented or disclosed and is fundamental to users' understanding.

Answer: The fire is a non-adjusting event. No change to year-end figures, but the nature and estimated ₹2,50,00,000 loss should be disclosed. If management omits this material disclosure, the auditor modifies the opinion.

Exam tips

Always list the dates first. Examiners reward a clear timeline in case answers.
In MCQs, test the condition: existed at year end means adjusting, arose later means non-adjusting.
Write the answer in provision, facts and conclusion form, with the conclusion naming the effect on the audit report.
Do not mix up SA 560 with Ind AS 10. SA 560 covers the auditor's duties and refers to the framework; Ind AS 10 covers the accounting treatment and the adjusting/non-adjusting split. Mention both in a combined question.
Mention that no procedures are required after the report date, but action is needed on facts that come to knowledge.

Practice questions from Completion and Review

SA 560 Subsequent Events: Objective and Types in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

SA 560 Subsequent Events: Objective and Types: frequently asked questions

What is the objective of SA 560?

The objective is to obtain sufficient appropriate audit evidence that events occurring between the date of the financial statements and the date of the auditor's report, requiring adjustment or disclosure, are properly reflected. It also requires the auditor to respond appropriately to facts that become known after the report date.

What is the difference between the date of the financial statements and the date of the auditor's report?

The date of the financial statements is the end of the latest period covered, such as 31 March 2027. The date of the auditor's report is the date you sign the report after obtaining sufficient appropriate evidence. Subsequent events fall in the gap between them.

What are adjusting and non-adjusting events?

These terms come from Ind AS 10, which SA 560 refers to through the applicable framework. Adjusting events give evidence of conditions existing at the balance sheet date, so amounts are adjusted. Non-adjusting events arise after that date and are disclosed if material, without changing recognised amounts.

Must the auditor look for events after the report date?

No. The auditor has no obligation to perform audit procedures after the date of the auditor's report. But if a fact becomes known that might have changed the report, the auditor must discuss it with management and act as SA 560 requires.