MC Question 11

The audit of Giggs Co’s financial statements for the year ended 31 October 2014 has been completed; the audit report and the financial statements have been signed but not yet issued.

The finance director of Giggs Co has just informed the audit team that he has received notification that a material receivable balance has become irrecoverable and Giggs Co will not receive any of the amounts owing.

What actions, if any, should the auditor now take to satisfy their responsibilities under ISA 560 Subsequent Events

A. No actions required as the audit report and financial statements have already been signed
B. Request management to adjust the financial statements, verify the adjustment and provide a new audit report
C. Request management to make disclosure of this event in the financial statements
D. Request that management adjust for this event in the following year’s financial statements as it occurred in year ending 31 October 2015.

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