ACCA Strategic Professional · Advanced Audit and Assurance (International) · Subsequent events and going concern
Kestrel Foods plc's auditor signed the report on 12 March 20X6 and the financial statements were issued on 25 March 20X6. On 10 April 20X6 the auditor learns of a fact that existed at the report date and would have caused a different report had it been known. Management amends the financial statements. Which action is required of the auditor under ISA 560?
The auditor must perform the procedures needed on the amended financial statements and issue a new or amended report dated no earlier than the approval of the amendment. This ensures users receive an opinion on corrected statements rather than relying on the earlier, now inappropriate report.
- ACarry out the necessary audit procedures on the amendment and issue a new report on the amended financial statements, with a date no earlier than the approval of the amendmentCorrect
- BAmend only the notes and leave the original report unchanged
- CAdvise shareholders informally and take no further action
- DResign immediately without issuing a new report
Explanation
For facts discovered after issue, if management amends the financial statements, the auditor applies the necessary procedures to the amendment, reviews steps taken to inform recipients of the earlier statements, and issues a new report. The new report is dated no earlier than the date the amended statements are approved. Leaving the original report unchanged would leave users relying on misstated statements with a clean opinion.
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