Page 218 - CA Inter Audit PARAM

CA Ravi Taori
Answer Facts Which Become Known to the Auditor After the Date of the Auditor’s Report but Before the Date
the Financial Statements are Issued: As per SA 560, “Subsequent Events”, the auditor has no obligation to
perform any audit procedures regarding the financial statements after the date of the auditor’s report.

However, when, after the date of the auditor’s report but before the date the financial statements are
issued, a fact becomes known to the auditor that, had it been known to the auditor at the date of the
auditor’s report, may have caused the auditor to amend the auditor’s report, the auditor shall

(i) Discuss the matter with management and, where appropriate, those charged with governance.

(ii) Determine whether the financial statements need amendment and, if so,

(iii) Inquire how management intends to address the matter in the financial statements.

If management amends the financial statements, the auditor shall carry out the audit procedures necessary
in the circumstances on the amendment.

Further, the auditor shall extend the audit procedures and provide a new auditor’s report on the amended
financial statements. However, the new auditor’s report shall not be dated earlier than the date of approval
of the amended financial statements.

In the instant case, ABC Ltd. received an amount of ` 5 crore on account of incentives pertaining to year
2023-24 in the month of April 2024 i.e. after finalisation of financial statements and signing of audit report
but before the issuance of Financial Statements to stakeholders. The Board of Directors of ABC Ltd. wished
to amend the financial statements and requested the CA. Rashmi (auditor) to consider this event and issue
a fresh audit report on the financial statements for the year ended on 31.03.2024.

After applying the conditions given in SA 560, CA. Rashmi can issue new audit report subject to date of
audit report which should not be earlier than the date of approval of the amended financial statements.

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