SA 560 Subsequent Events explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
SA 560 deals with events that happen after the balance sheet date and facts that the auditor learns about after signing the report. It sets different duties for three periods: up to the date of the report, between the report and issue of the statements, and after issue.
SA 560, as effective for audits of financial statements for periods beginning on or after 1 April 2009, applies to every audit. ICAI may revise standards, so check icai.org for the current text. Prompt closing of books of accounts makes post-year-end events easier to spot.
Up to the date of the report, the auditor must obtain evidence that events requiring adjustment or disclosure have been identified, by understanding management's procedures, inquiring, reading minutes and reading later interim statements, and must get a written representation. After the report but before issue, the auditor has no duty to search, but if a fact comes to light that could have changed the report, the auditor discusses it, and a new report follows any amendment. After issue, similar steps apply, and the auditor can seek to prevent reliance on the report if management does not act.
Scope and objectives (paragraphs 1-5)
The standard does not deal with other information received after the report date, which is covered by SA 720; it may, however, bring to light a subsequent event (paragraph 1). Financial reporting frameworks usually separate events that give evidence of conditions at the balance sheet date from events that give evidence of conditions arising later (paragraph 2). The date of the auditor's report tells readers that the auditor has considered events up to that date.
The objectives are to obtain evidence that events between the balance sheet date and the report date needing adjustment or disclosure are properly reflected, and to respond appropriately to facts that become known after the report date and might have changed the report (paragraph 4).
| Term (paragraph 5) | Plain meaning |
|---|---|
| Date of the financial statements | The end of the latest period covered |
| Date of approval | The date all statements and notes have been prepared and those with recognised authority have taken responsibility for them |
| Date of the auditor's report | The date the auditor dates the report |
| Date issued | The date the report and audited statements are made available to third parties |
| Subsequent events | Events between the balance sheet date and the report date, and facts that become known to the auditor after the report date |
Date points worth noting: the report cannot be dated before the auditor has enough evidence, which includes evidence that the statements have been prepared and responsibility taken, so it cannot be earlier than the date of approval (A3). Final shareholder approval is not needed to reach that stage (A2). The issue date depends on the regulatory setting and may be the filing date; it must be at or after the date the report reaches the entity (A4).
Period 1: up to the date of the report (paragraphs 6-9)
The auditor performs procedures to obtain sufficient evidence that all events from the balance sheet date to the report date that require adjustment or disclosure have been identified, but is not expected to redo work where earlier procedures already gave satisfactory conclusions (paragraph 6). The procedures cover the period up to the report date, or as near as practicable, and take account of the risk assessment (paragraph 7). They include:
| Procedure | Paragraph |
|---|---|
| Understanding management's procedures for identifying subsequent events | 7(a) |
| Inquiring of management and, where appropriate, those charged with governance | 7(b) |
| Reading minutes of meetings of owners, management and those charged with governance held after the balance sheet date, and inquiring about meetings whose minutes are not ready | 7(c) |
| Reading the latest interim financial statements, if any | 7(d) |
If events requiring adjustment or disclosure are found, the auditor decides whether they are properly reflected (paragraph 8). A written representation is requested that all events needing adjustment or disclosure under the framework have been adjusted or disclosed (paragraph 9; see SA 580).
The application material says the work is on top of other procedures that happen to give evidence on events, such as cut-off tests and the review of later receipts from debtors (A6). If books are not up to date and no interim statements or minutes exist, the auditor may inspect available records, including bank statements (A7). Further steps may include reading budgets and cash flow forecasts, inquiring of legal counsel on litigation and claims, and considering specific representations (A8). Inquiries may cover items based on preliminary data, new commitments or borrowings, asset sales, capital increases, mergers, assets destroyed, contingencies, unusual adjustments and recoverability of assets (A9).
Period 2: after the report, before issue (paragraphs 10-13)
The auditor has no obligation to perform procedures on the statements after the report date. But if a fact becomes known that might have caused the auditor to amend the report had it been known then, the auditor discusses it with management and those charged with governance, decides whether the statements need amendment and, if so, asks how management will deal with it (paragraph 10). Under the engagement terms (see SA 210), management agrees to tell the auditor of facts arising before issue (A12).
If management amends the statements, the auditor performs procedures on the amendment, extends the subsequent events procedures to the new report date and gives a new report, dated no earlier than the approval of the amended statements (paragraph 11).
Restricted amendment and dual dating
Where law or the framework permits management to limit the amendment to the effects of the subsequent event, and the approving body to limit its approval likewise, the auditor may limit the extra procedures to that amendment. The auditor then either adds a second date to the report limited to the amendment, or gives a new or amended report with an Emphasis of Matter or Other Matter paragraph stating that procedures were restricted to the amendment described in the note (paragraph 12). With dual dating, the original date stays, since it shows when the audit work on those statements was completed (A13). See SA 706 for such paragraphs.
Management does not amend
Where the law or framework does not require amended statements, often because the next period's statements are imminent with proper disclosure (A14), and management does not amend where the auditor thinks it needed, the auditor modifies the opinion under SA 705 if the report has not yet been given to the entity (paragraph 13(a)). If the report has been provided, the auditor tells management, and unless all those charged with governance are involved in management, them too, not to issue the statements to third parties before the changes. If they are issued anyway, the auditor takes appropriate action to seek to prevent reliance on the report (paragraph 13(b)). The course of action depends on the auditor's legal rights and obligations, and legal advice may be appropriate (A16-A17).
Period 3: after issue (paragraphs 14-17)
Again there is no duty to perform procedures, but if a fact becomes known that might have changed the report, the auditor follows the same discussion steps (paragraph 14). If management amends, the auditor performs procedures on the amendment, reviews the steps management took to inform those who received the earlier statements, extends procedures to the new report date and gives a new report, or applies the restricted-amendment approach (paragraph 15). The new or amended report includes an Emphasis of Matter or Other Matter paragraph referring to a note that explains the reason and to the earlier report (paragraph 16).
If management does not take the necessary steps or does not amend, the auditor notifies management, and those charged with governance unless all are involved in management, that the auditor will seek to prevent future reliance, and if they still do not act, takes appropriate action (paragraph 17, A20).
Illustrative example
Sagar Textiles Pvt Ltd is an invented company with a 31 March year-end; all figures are illustrative. The auditor signs on 20 June. Before signing, the auditor reads board minutes of May and finds a fire at a warehouse in April; stock costing Rs 40 lakh was destroyed. That is a condition arising after the balance sheet date, so disclosure is considered, and the auditor checks the insurance claim and the note. On 5 July, before the statements are issued, the auditor learns that a large debtor became insolvent in February, so the receivable at 31 March needed provision. The auditor discusses it with management and the audit committee. Management amends; the auditor extends procedures to the new date and gives a new report dated after the amended statements are approved.
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Key takeaways
- Up to the report date, the auditor must identify events needing adjustment or disclosure.
- A written representation on subsequent events is requested.
- After the report date there is no duty to search, but a new fact that could change the report must be handled.
- Amended statements get a new report, or a dual-dated one in restricted cases.
- If management will not amend, the auditor may need to seek to prevent reliance.
Read next
- SA 570 part 1: going concern
- SA 580: written representations
- SA 700 part 1: forming an opinion
- SA 706: emphasis of matter
Disclaimer: Based on the Standards on Auditing and quality standards issued by the Institute of Chartered Accountants of India, in the versions named in the article, and ICAI's announcement of 31 March 2026 on SQM 1 and SQM 2, as consulted on 3 October 2026. ICAI revises standards from time to time; check the current text and effective dates on icai.org. This article is general information, not legal advice; check the official text before acting.