AICPA Issues TPAs Concerning Subsequent Events

TPA 8700.01, "Effect of FASB ASC 855 on Accounting Guidance in AU Section 560" TPA 8700.01 provides guidance on the effect of FASB Accounting Standards Codification 855, Subsequent Events on accounting guidance contained in AU section 560, Subsequent Events. The TPA clarifies that accounting guidance in AU 560 is no longer applicable for auditors of nongovernmental entities. Those entities should follow FASB ASC 855 for subsequent events accounting. In addition, AU 560 is no longer applicable for auditors of governmental entities that follow GASB accounting standards. Those entities should look to GASB Statement 56 for subsequent events accounting. However, governmental entities that follow accounting principles issued by FASAB should continue to apply the accounting guidance in AU 560 until FASAB issues subsequent events accounting standards or until AU 560 is amended. TPA 8700.01 is available on the AICPA website.  TPA 8700.02, "Auditor Responsibilities for Subsequent Events" TPA 8700.02 provides guidance on auditor responsibilities for subsequent events. Accounting guidance for subsequent events in FASB ASC 855 requires companies to disclose in the footnotes the date through which they have evaluated subsequent events for inclusion or disclosure in the financial statements. Questions have arisen about the relationship between that date, the date of the management representation letter obtained for the audit, and the date of the auditor's report. TPA 8700.02 clarifies that those three dates should be the same. Therefore, auditors might need to coordinate the dates by discussing the dating requirements with management when planning the audit. Also, in the audit engagement letter, the auditor might clarify their understanding that the date disclosed in the subsequent events footnote will be the same as the date of the management representation letter requested for the audit. TPA 8700.02 is available on the AICPA website.