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CA Final · Advanced Auditing, Assurance and Professional Ethics · Completion and Review

While auditing Vindhya Steels Ltd for the year ended 31 March, the auditor plans subsequent-events procedures. The cut-off testing and the review of post-year-end receipts from debtors have already been done for obtaining evidence on year-end balances. Which view is consistent with SA 560?

Subsequent-events procedures are in addition to procedures done for other purposes, such as cut-off testing or review of subsequent debtor receipts. Those other procedures may still provide evidence about subsequent events, but they do not replace the procedures SA 560 requires between the balance sheet date and the report date.

  1. AThese procedures are sufficient, so no separate subsequent-events procedures are needed
  2. BThe subsequent-events procedures are in addition to procedures performed for other purposes, though those other procedures may also give evidence about subsequent eventsCorrect
  3. CSubsequent-events procedures apply only after the report is signed
  4. DSubsequent-events procedures may be limited to inquiry of management

Explanation

SA 560 A6 says the required procedures are in addition to procedures performed for other purposes, such as cut-off or subsequent receipts testing, which may nevertheless provide evidence about subsequent events. They do not replace the required procedures. Treating them as a complete substitute is the error in option A.

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