Main changes from AUS 706 (October 1995)Main changes from AUS 706 (October 1995) Subsequent Events

Main changes from AUS 706 (October 1995) Subsequent Events

The main differences between this Auditing Standard and the Auditing Standard issued by the Auditing & Assurance Standards Board of the Australian Accounting Research Foundation, AUS 706 (October 1995) Subsequent Events, are that in this Auditing Standard:

1. The word ‘shall’, in the bold-type paragraphs, is the terminology used to describe an auditor’s mandatory requirements, whereas an auditor’s degree of responsibility is described in AUS 706 by the word ‘should’.
2. The explanatory guidance paragraphs provide guidance and illustrative examples to assist the auditor in fulfilling the mandatory requirements, whereas in AUS 706 some obligations are implied within certain explanatory paragraphs. Accordingly, such paragraphs have been redrafted to clarify that the matter forms part of the explanatory guidance.
3. The following implied obligations, in AUS 706, have been elevated and re-stated as specific mandatory requirements:

(a) when the financial report is amended, the auditor shall carry out the audit procedures necessary in the circumstances and shall provide management and those charged with governance with a new report on the amended financial report (paragraph 15);

(b) when the auditor’s report has been released to the entity, the auditor shall notify those charged with governance not to issue the financial report and the auditor’s report thereon to third parties (paragraph 18);

(c) if the financial report is subsequently released, the auditor shall take action to prevent reliance on the auditor’s report (paragraph 19);

(d) when the financial report is revised, the auditor shall carry out the audit procedures necessary in the circumstances, shall review the steps taken by management and those charged with governance to ensure that anyone in receipt of the previously issued financial report together with the auditor’s report thereon is informed of the situation, and shall issue a new report on the revised financial report (paragraph 23); and

(e) when those charged with governance do not:

(i) take the necessary steps to ensure that anyone in receipt of the previously issued financial report together with the auditor’s report thereon is informed of the situation; or

(ii) revise the financial report in circumstances where the auditor believes it needs to be revised;

the auditor shall take action with the objective of preventing future reliance on the auditor’s report and shall notify those charged with governance of this action (paragraph 26); and

4. The explanatory paragraphs on the definitions of “reporting date”, “date of approval of the financial report”, “date of the auditor’s report” and “date the financial report is issued” as contained in ISA 560, are adopted and adjusted, where appropriate, to align to the wordings in AASB 110 Events after the Balance Sheet Date.