Auditors actions regarding events after the date of the audit report
The auditor does not have any responsibility to perform procedures or make any inquiry regarding the financial statements after he has issued his audit report.
During this period from the date of the auditor‘s report to the date when financial statements are issued to the directors of the company, the responsibility to inform the auditor of facts, which may affect the financial statements, rests with management.
When after the date of the of the auditor‘s report but before the financial statements are issued to the shareholders, the auditor becomes aware of facts which may materially affect the financial statements, the auditor should consider whether the financial statements need to be amended. He should then discuss the matter with management and should take appropriate action depending on the circumstances.
If management amends the financial statements to reflect the effect of the subsequent event, the auditor should carry out the necessary procedures and report on the amended financial statements.
When management does not amend the financial statements in circumstances where the auditor believes they need to be amended and the auditor‘s report has not been released to the entity, the auditor should amend his report and express a qualified opinion or adverse opinion as appropriate.
Where the auditor‘s report has been released to the entity he should notify the directors not to issue the financial statements and the auditor‘s report to the shareholders and other third parties. If the financial statements are subsequently released, the auditor should take action to prevent reliance on the auditor‘s report.
Facts discovered after the financial statements have been issued to shareholders
After the financial statements have been issued, the auditor has no obligation to make any inquiry regarding the financial statements. However, if it becomes aware of facts which existed at the date of the auditor‘s report and which if known, at that date, may have caused the auditor to modify his report, the auditor should consider whether the financial statements need to e revised, should discuss the matter with managements and should take action appropriate in the circumstances.
When management revises the financial statements, the auditor should carry out the audit procedures necessary in the circumstances, should review the steps taken by management to ensure that any one in receipt of the previously issued financial statements together with the auditor‘s report thereon is informed of the situation and would issue a new report on the revised financial statements. The auditor‘s report should include an emphasis of matter paragraph referring to a note in the financial statements and to the earlier report issued by the auditor