ACCA Strategic Professional · Advanced Audit and Assurance (International) · Subsequent events and going concern
Brindle plc's financial statements for the year ended 30 June 20X6 were authorised and issued on 15 September 20X6 with an unmodified audit opinion. On 10 October 20X6 the auditor learns of a fact that existed at the report date and would have caused the report to be modified. Management has not been told. Which action does ISA 560 require of the auditor?
The auditor must discuss the matter with management and those charged with governance. If the financial statements are amended, the auditor extends subsequent events procedures to the new report date and issues a new or amended report. Ignoring it or going straight to shareholders is not what ISA 560 requires.
- ATake no action because the financial statements have been issued
- BWait until the next year's audit and deal with it as a prior period matter
- CDiscuss with management, and if the financial statements are to be amended, perform procedures on the amendment and issue a new reportCorrect
- DImmediately notify the shareholders directly without consulting management
Explanation
For facts discovered after the financial statements are issued, ISA 560 requires the auditor to discuss the matter with management and those charged with governance, determine whether amendment is needed, and if so, extend procedures and provide a new or amended report. Waiting a year or contacting shareholders directly first is not the prescribed route.
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