Adoption of Philippine Standards on Auditing 560

PSA 560 establishes the auditor’s responsibilities regarding subsequent events occurring between the date of the financial statements and the date of the auditor’s report.
The standard ensures auditors evaluate events that may affect the financial statements and requires appropriate adjustments or disclosures before the report issuance.

Subsequent events are those events or transactions that occur after the balance sheet date but before the financial statements are issued or are available to be issued.
They may have either an adjusting effect on the financial statements or a non-adjusting effect that requires disclosure.

Auditors must perform procedures to identify subsequent events:
- Review management’s procedures for identifying events.
- Inquire with management, legal counsel, and others about events occurring after the balance sheet date.
- Review minutes of meetings held after the balance sheet date.
Auditors evaluate whether subsequent events provide additional evidence about conditions at the balance sheet date.
If the events indicate adjustments to financial statements are necessary, such adjustments must be made before report issuance.
If the events are non-adjusting but significant, they must be disclosed in the notes.

The auditor’s report must reflect the evaluation of subsequent events.
If adjustments or disclosures are required, the auditor ensures the financial statements are appropriately amended.

The adoption of PSA 560 by the Professional Regulatory Board of Accountancy makes compliance mandatory for all auditors practicing in the Philippines.
Non-compliance with PSA 560 procedures could result in professional sanctions or penalties under the regulatory framework governing the accounting profession.

The resolution adopting PSA 560 was formally approved by the Board Chairperson and Commissioners of the Professional Regulation Commission and attested by the Board Secretary.
The official resolution ensures that PSA 560 is integrated into the regulatory standards governing auditing practices in the Philippines.