Lesson: Auditor's Responsibility for Subsequent Events

In this lesson, the auditor's responsibility for subsequent events is discussed, including the importance of investigating and determining the appropriate action to take regarding such events. The lesson covers the time period between the financial statement date and the date of the audit report, as well as the auditor's responsibility to consider the effect of any event occurring after the audit report date. Distinguishing between type one and type two events is emphasized, with type one events affecting the year under audit and type two events being significant to shareholders but not affecting the audited year. The lesson also highlights specialized evidence needed to identify significant subsequent events, such as bank statements, board meeting minutes, and client-prepared financial statements for the subsequent period.