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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Completion and final review

Brindle Ltd's financial statements were issued with an unmodified auditor's report dated 5 April 20X6. On 20 April 20X6 the auditor learns that a fact existed at the report date that, had it been known, would have caused the report to be modified. Management has not yet told shareholders about the fact. Which action is correct under ISA 560?

The auditor should discuss the matter with management, decide whether the financial statements need amending, and if they do, review the amendment and issue a new auditor's report. Ignoring the fact because the statements are issued, or simply changing the report date, would not comply with ISA 560.

  1. ATake no action because the financial statements have been issued
  2. BDiscuss with management and, if the financial statements need amendment, consider whether to issue new financial statements and a new auditor's reportCorrect
  3. CImmediately resign and publish the reason in the press
  4. DAmend the original report date to 20 April 20X6 without further work

Explanation

For facts discovered after the financial statements are issued, the auditor discusses the matter with management, determines whether amendment is needed, and if so inquires how management intends to address it. If management amends, the auditor performs necessary procedures and issues a new report. Simply backdating or ignoring is wrong.

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