Summary
The video explains the crucial role of auditors in assessing subsequent events that occur after a client's financial statement year-end. It differentiates between adjusting and non-adjusting events, using examples like equity financing and mergers. Auditors follow practical procedures like management inquiries and internet searches to identify these events, relying on professional judgment to decide if adjustments or disclosures are needed in financial statements. The implications of subsequent events on the auditor's report, such as qualifications and disclosure requirements, are also discussed.
Auditor's Responsibility for Subsequent Events
Explaining the responsibility of auditors for subsequent events that occur after the year end of a client's financial statements.
Examples of Subsequent Events
Providing examples of subsequent events such as equity financing, business segment closures, and mergers and acquisitions.
Adjusting vs. Non-Adjusting Events
Discussing the difference between adjusting and non-adjusting events, and when auditors need to adjust financial statements based on subsequent events.
Identifying Subsequent Events
Explaining practical procedures to identify subsequent events including inquiries with management, reviewing board minutes, and conducting internet searches.
Evaluation of Subsequent Events
Detailing the evaluation process for subsequent events, requiring professional judgment to determine if adjustments or disclosures are necessary in financial statements.
Impact on Auditor's Report
Discussing the implications of subsequent events on the auditor's report, including qualifications, emphasis of matter paragraphs, and disclosure requirements.
Get your own AI Agent Today
Thousands of businesses worldwide are using Chaindesk Generative
AI platform.
Don't get left behind - start building your
own custom AI chatbot now!