[Anonymous]

Hey,

Here is the situation: the financial statements date is Jan.31, a material loss occurred on Feb.11, the issuance date of the report is Feb.25 and the auditor was aware of the loss on March 2nd.

The question is if the loss on Feb.11 is the subsequent event? But isn’t it that the time period of subsequent event is between B/S date and F/S date?

Thanks,

[QuesoDip]

Is the material loss related to the prior year?

REG - 88 - 8 Weeks (Becker, Ninja Audio/Flashcards, Wiley TB)
FAR - 87 - 10 Weeks (Becker, Ninja Audio)
AUD - 98 - 6 Weeks (Becker, Ninja Audio, Ninja MCQ)
BEC - 87 - 2 Weeks (Becker & Ninja Audio)

[Anonymous]

Yes and occurred on Feb.

[QuesoDip]

If it is related to the prior year, it should be considered a subsequent event. The F/S date was 1/31 and the loss occurred on 2/11 which was related to an event that happened the year before. The auditor has to either dual date the report or reissue the report with an updated date of 3/2.

REG - 88 - 8 Weeks (Becker, Ninja Audio/Flashcards, Wiley TB)
FAR - 87 - 10 Weeks (Becker, Ninja Audio)
AUD - 98 - 6 Weeks (Becker, Ninja Audio, Ninja MCQ)
BEC - 87 - 2 Weeks (Becker & Ninja Audio)

[itsjustatest]

Whether it is related to the year under audit or not is not relevant to be disclosed as a subsequent event. If it occurs between the issuance date and the FS date, and is material, it needs to be disclosed.

AUD - 83
REG - 78
FAR - 69,73,79
BEC - 85

[QuesoDip]

@itsjustatest You're right, I was thinking of having to accrue for something.

REG - 88 - 8 Weeks (Becker, Ninja Audio/Flashcards, Wiley TB)
FAR - 87 - 10 Weeks (Becker, Ninja Audio)
AUD - 98 - 6 Weeks (Becker, Ninja Audio, Ninja MCQ)
BEC - 87 - 2 Weeks (Becker & Ninja Audio)

[Anonymous]

But the loss occurred on 2/11 after the F/S date on 1/31. How come it is a subsequent event? the time period of subsequent event isn't between B/S date and F/S date?

[NYCaccountant]

I was having issues with the way Wiley explained this in the book. Thanks for the explanation @ QuesoDip.

So dual dating means the report will keep the same date, but the footnote for the disclosure will have a different date? So I'm only liable for this subsequent event, correct? And if I choose to not dual date the report, I would be liable for all subsequent events until that date? Is this correct?

If the loss occurs after the fiscal year end, but before the release of the audit report, it's a subsequent event that requires disclosure.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[itsjustatest]

FS Date is 1/31 and Report goes out 2/25. Anything happening (materially) in that time window that can be included as a subsequent event. For example a company sells off one of their subsidiaries or liquidates an investment for a large realized loss on 2/20. This is not related to the year under audit, however it materially impacts the report and anyone relying on it as their have been significant changes in that window. What was on the BS/IS at 1/31 does not tell the true story of the company's performance as of 2/25, so it needs to be disclosed.

Think of it this way – Auditing is meant to protect investors. If something happens that would affect the investors decisions, they are going to disclose it.

AUD - 83
REG - 78
FAR - 69,73,79
BEC - 85

[QuesoDip]

@NYCaccountant I believe so, the auditor should dual date the report if they only want to extend their responsibility to that particular subsequent even beyond the date of the auditor's report. If they auditor chooses to not dual date and instead updates the report to the later date, 3/2 in this example, they would be liable for all subsequent events up until that point.

REG - 88 - 8 Weeks (Becker, Ninja Audio/Flashcards, Wiley TB)
FAR - 87 - 10 Weeks (Becker, Ninja Audio)
AUD - 98 - 6 Weeks (Becker, Ninja Audio, Ninja MCQ)
BEC - 87 - 2 Weeks (Becker & Ninja Audio)

[Anonymous]

@itsjustatest Thanks for the detailed explanation!!

[Author]

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