Mitch Ziegel and Rosie Punter are discussing the audit plan for a large manufacturing company. The company
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Mitch and Rosie are reviewing the draft plan to ensure that adequate procedures are included to meet their obligations for detecting subsequent events during the period from year end to the date of signing the audit report. Mitch is the engagement partner on the audit and Rosie is an audit manager. Rosie admits to Mitch that she has always had trouble distinguishing the two types of subsequent events in IAS 10 and therefore has some trouble applying CAS 560. She also admits to Mitch that she has never been involved in an audit where there was a subsequent event arising after the date of the audit report, so she doesn't know what the auditor is supposed to do in these circumstances.
Required
(a) Explain the difference between the two types of subsequent events. Give an example of each and explain the type of adjustment (if any) to the financial statements that would be required.
(b) List some audit procedures that should be in the audit plan for this company for the detection of subsequent events occurring prior to the date of the audit report.
(c) Explain the auditor's responsibilities for subsequent events that arise after the date of the audit report (after the date the financial statements are issued). What is the difference in the auditor's responsibilities between these events and those arising before the date of the audit report?
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