Required information Subsequent Events-Two Types Read the overview below and complete the activities that follow Oftentimes a CPA's opinion on the fairness of the financial statements may be changed by subsequent events. Subsequent events are events that happen after the balance sheet date but before the financial statements are issued. Auditors have responsibility for evidence not available at the close of the period but which becomes available before the auditors finish their fieldwork and issue their opinion. Subsequent events are divided into two categories: Type 1 are those providing additional evidence about facts existing on or before the balance sheet date and Type 2 are those involving facts coming into existence after the balance sheet date. CONCEPT REVIEW: Accounting standards divide subsequent events into two categories--those that provide more information about facts that already existed at the balance sheet date (Type 1 and those that involve facts after the balance sheet date (Type 2). Match each definition or example with the correct type of subsequent event. During the audit, a customer with a large A/R balance at year-end declares bankruptcy A lawsuit that was in progress as of year-end was settled shortly thereafter Type 1 Type 2 A flood damages a significant portion of the operating facility after year-end. Conditions that have come into existence after the balance sheet date Additional evidence about conditions that existed at the balance sheet date. Reset