Performance Audit Manual
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8030 Subsequent Events
Dec-2023
Overview
The purpose of this section is to set out requirements and guidance with respect to the potential impact of “subsequent events” on a performance audit or a special examination report and the engagement team’s related responsibilities.
Subsequent events refer to new information that comes to the attention of the auditor during the reporting phase of
- conditions that existed during the period covered by the audit, and
- information of events after the period of the audit,
when there is a possible impact on the content of the audit report.
OAG Policy
The engagement team shall consider subsequent events and new information obtained during the reporting phase of the audit, and the engagement leader shall assess the impact on the findings and conclusions of the audit report and its date. [Nov-2016]
OAG Guidance
When the period covered by the audit ends, there is a further period before the audit report is dated (OAG Audit 8017 Report content approval and date of the report). During that time, the engagement team needs to remain alert to any evidence or events that may indicate that the findings and conclusions in the draft audit report are incorrect.
Examples of subsequent events that could occur include
- a new or a change in policy direction,
- a change in legislation,
- cancellation of a program,
- a change in the program agreement,
- outsourcing or in-sourcing of a program or service,
- a change in the responsible party’s organizational structure or its roles and responsibilities,
- identification of fraud or system failure, or
- a change in program delivery.
Engagement teams can use the following procedures to identify subsequent events:
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Inquiring of management and those charged with governance as to whether any subsequent events have occurred which might impact the report.
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Obtaining an understanding of any management processes established to ensure that subsequent events are identified.
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Reviewing minutes, if any, of the meetings of management and those charged with governance, that were held up to or after the date of the report and inquiring about matters discussed at any such meetings for which minutes are not yet available.
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Reviewing performance measurement reports, if any, prepared up to or after the date of the assurance report.
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Reviewing government media releases and Hansard to identify any events that may impact the assurance report.
There are two different possible scenarios where subsequent events could occur that could affect the content of the audit report: events that occur before the date of the report, and events that occur after the date of the report.
For each scenario, the team keeps the entity (or entities) apprised of changes to the audit report. Immediate discussions are particularly important if events result in changes to conclusions and recommendations.
Events occurring before the date of the report
There are two possible scenarios where subsequent events could occur before the date of the report.
Evidence falls within the period covered by the audit
If the engagement team obtains evidence that was in effect within the period covered by the audit (for example, new evidence, or a policy that the team was unaware of) that would have had an impact on the audit report had it been known earlier, the team considers the impact on the findings and conclusions in the report, performs additional procedures if necessary, and makes the necessary adjustments to the audit report.
Evidence falls outside the period covered by the audit
Performance audits
If, the team finds evidence of conditions pertinent to the audit report that did not exist during the period covered by the audit, there is no requirement to undertake additional audit work; however, the team must assess the impact on the findings and conclusions in the report. Typically, these events demonstrate management’s actions in the period following the audit. At the discretion of the engagement leader these events may be disclosed in a report section entitled “Subsequent Events.” If changes are made to the report, additional audit procedures may be required.
Special examinations
If, after the end of the period under examination, the engagement team obtains evidence that was NOT in effect within the original period covered by the audit, the team considers the impact on the findings and conclusions in the report, and on the overall period under examination. An extension to the period under examination may be required, which in turn would necessitate additional audit work for all of the lines of enquiry. In this event, the team should consult with Audit Services.
Events occurring after the date of the report
The date of the assurance report and the tabling date are usually not the same. There is typically a lapse of time between the date of the assurance report and the tabling date. During that period, if the engagement leader becomes aware of a fact that if known earlier might have led the engagement leader to modify the audit report, the engagement leader should assess the significance of the fact and take appropriate action in the circumstances. The engagement leader should consult the assistant auditor general and if necessary the Auditor General to determine whether the team should make the necessary adjustments to the audit report, and amend the date of the report, which may have an impact on tabling day.
Therefore, the engagement teams may take action as appropriate in the circumstances. Such action may include:
- Determining if the subsequent event has a significant impact on the underlying subject matter.
- Considering whether an amendment to the report is needed.
- Determining the nature, timing and extent of additional audit procedures and performing them, as necessary.
If the engagement team determines that the report needs to be amended, and the report has not yet been tabled, the team may
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clarify that the effect of the event or fact on the underlying subject matter has been considered and there was no impact on the conclusion; or
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when the effect of the event or fact on the underlying subject matter or potential impact on the assurance conclusion is significant, revise the assurance conclusion and change the date of the assurance report to the later date or disclose the impact of the subsequent event and include an additional date restricted to that amendment (dual date the report).
If changes are made to the report, additional audit procedures may be required.
If the engagement team determines that the report needs to be amended and the report has already been tabled, the engagement team may consider whether to
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issue a statement or addendum to the report that highlights the event or fact and communicate its impact on the assurance conclusion; or
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take other appropriate action such as issuing a press release to make users aware of the subsequent event or fact and its impact on the conclusion.