Chap 10 IAS10 Events after RP/ISA560 Subseq Events

Question 1

IAS10 events after reporting period

• Adjusting event
  Definition

Answer 1

Prov’d additional. Evidence re conditions existing @ reporting date
Fs should be adjusted to reflect this info

Question 2

Adjusting event

- 5 examples

Answer 2

1. ALLOWANCE doubtful receivables/ damaged inventory

2 Amounts received/ receivable re INSURANCE claim which were being negotiated at reporting date

3 Agreement TAX LIAB

4 Discovery FRAUD/ERROR revealing Fs = incorrect

5 determination of purchase/sale price non current asset purchase/sold b4 year end

Question 3

IAS 10 Events after reporting date

• non adjusting event
• definition

Answer 3

Concerning events arose after reporting date

Disclosure required in notes to FS (indicating what effect they may have)

Question 4

Non adjusting event

- 5 examples

Answer 4

1. Losses non current asset/ inventory as result FIRE/FLOOD
2. Issue new share / loan capital

3 major changes in composition of group (merger/acquisition)

4. Strikes, gov’t action eg nationalisation
5. Purchase sale significant non current asset

Question 5

ISA560 Subsequent Events requires Auditor to…

Answer 5

1. Obt suff & approp Evidence. About whether

• events occurring between date of FS & date of AReport
• that require adjustment/disclosure
• are approp reflected in accord FRFRAMEWORK

2. Respond approp to facts that become known after date of AReport

Question 6

Subsequent Events procedures

- 3 examples involving Enquiries of management

Answer 6

1. If aware adjusting/non adjusting event event not yet included in FS
2. PROCEDURES for identifying events after reporting period

3 obtain WREP management confirming they have informed A all subsequent events & a/c for them approp in Fs

Question 7

Subsequent Procedures
Examples

Review what 6 things?

Answer 7

1 budgets
2 forecasts
3 cash flow

4 managma/cs

5 interim info

6 progress known contingencies & risk areas

Question 8

Examples Subsequent Events procedures

3 sources of info outside entity

Answer 8

Public knowledge

Competitors

Cust/suppliers

Question 9

Examples subsequent events procedures

inspect what 4 things?

Read? - 1

Answer 9

1 correspondence legal advisors

2 sale price of inventory after year end

3 after date receipts from receivables

4 cash book after year end for payments/receipts that were not accrued for @ year end

Also read minutes of D meetings