STATEMENT ON AUDITING PROCEDURE
(Supersedes Chapter 11 of Statement on Auditing Procedure No. 33)
1. An independent auditor's report ordinarily is issued in con-nection with historical financial statements that purport to pre-sent financial position at a stated date and results of operations for a period ended on that date. However, events or transactions sometimes occur subsequent to the balance sheet date, but prior to the issuance of the financial statements and auditor's report, that have a material effect on the financial statements and there-fore require adjustment or disclosure in the statements. These occurrences, hereinafter referred to as "subsequent events," are the subject of this Statement.
2. Two types of subsequent events require consideration by management and evaluation by the independent auditor.
3. The first type consists of those events that provide addi-tional evidence with respect to conditions that existed at the date of the balance sheet and affect the estimates inherent in the process of preparing financial statements. All information that becomes available prior to the issuance of the financial statements should be used by management in its evaluation of the condi-tions on which the estimates were based. The financial state-
Issued by the Committee on Auditing Procedure American Institute of Certified Public Accountants
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