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Subsequent Event: Type 1
Event that occurced after the cutoff however, impacts the finanical statements of the current period and requires adjusting the financials. Example, a material customer on account is going bankrupt. No longer able to collect AR. Adjust to Allowance for Doubtfull Accounts
Subsequent Event: Type 2
Events that come into existence soon after the balance sheet date that are significant in the future operations of the company. It should be brought to the users attention. This does not require adjusting the financials, but requires disclosure in the notes.
Audit Procedure 1
Obtain an understanding of management's procedures to ensure that subsequent events are identifed.
Audit Procedure 2
Inquire of managment (and those charged with governance) about whether subsequent events have occurred
Audit Procedure 3
Read available mintues of directors, stockholders, and appropriate committee meetings that have been held after the date of the finanical statements and inquire about matters discussed at any such meeting for which minutes are not yet available.
Audit Procedure 4
Read the company's latest subsequent interim finanical statments, if any
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