Auditing Standard ASA 2021-2 Amendments to Australian Auditing Standard ASA 560 Subsequent Events

Administered by Department of the Treasury

Legislation au F2021L01300 In force Legislative Instrument

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ASA 2021-2

(September 2021)

Explanatory Statement

ASA 2021-2 Amendments to Australian Auditing Standard ASA 560 Subsequent Events

Issued by the Auditing and Assurance Standards Board

Obtaining a Copy of this Explanatory Statement

This Explanatory Statement is available on the Auditing and Assurance Standards Board (AUASB) website: www.auasb.gov.au

Contact Details

Auditing and Assurance Standards Board

Podium Level 14, 530 Collins Street

Melbourne   Victoria   3000

AUSTRALIA

Phone: (03) 8080 7400

E-mail: enquiries@auasb.gov.au

Postal Address:

PO Box 204, Collins Street West

Melbourne   Victoria   8007

AUSTRALIA


Reasons for Issuing Auditing Standard ASA 2021-2

The AUASB issues Auditing Standard ASA 2021-2 Amendments to Australian Auditing Standard ASA 560 Subsequent Events pursuant to the requirements of the legislative provisions and the Strategic Direction explained below.

The AUASB is a non corporate Commonwealth entity of the Australian Government established under section 227A of the Australian Securities and Investments Commission Act 2001, as amended (ASIC Act).  Under section 336 of the Corporations Act 2001, the AUASB may make Auditing Standards for the purposes of the corporations legislation.  These Auditing Standards are legislative instruments under the Legislation Act 2003.

Under the Strategic Direction given to the AUASB by the Financial Reporting Council (FRC), the AUASB is required, inter alia, to develop auditing standards that have a clear public interest focus and are of the highest quality.

Purpose of Auditing Standard ASA 2021-2 Amendments to Australian Auditing Standard ASA 560 Subsequent Events

The purpose of the Auditing Standard is to make amendments to the requirements and application and other explanatory material of the following Auditing Standard:

ASA 560 Subsequent Events (Issued October 2009 and amended to December 2015)

Main Features

This Auditing Standard is being amended to achieve harmonisation with ISA (NZ) 560 Subsequent Events which was amended in February 2020. This Auditing Standard makes amendments to Australian Auditing Standard ASA 560 Subsequent Events made under Section 336 of the Corporations Act 2001 to clarify the timing of communications and possible actions the auditor may take when facts become known to the auditor after the financial report has been issued that, had it been known to the auditor at the date of the auditor’s report, may have caused the auditor to amend the auditor’s report.

Operative Date

ASA 2021-2 Amendments to Australian Auditing Standard ASA 560 Subsequent Events is operative for financial reporting periods commencing on or after 15 December 2021.

Process of making Australian Auditing Standards

The AUASB’s Strategic Direction, inter alia, provides that the AUASB develop Australian Auditing Standards that:

  • have a clear public interest focus and are of the highest quality;
  • use the International Standards on Auditing (ISAs) of the International Auditing and Assurance Standards Board (IAASB) as the underlying standards;
  • conform with the Australian regulatory environment; and
  • are capable of enforcement.
Consultation Process prior to issuing the Auditing Standard

The AUASB has consulted publicly as part of its due process in developing the Auditing Standard.  Exposure Draft ED 03/21 Proposed Auditing Standard ASA 2021-2 Amendments to Australian Auditing Standard ASA 560 Subsequent Events was issued on 30 June 2021 with a 30-day comment period.

Submissions were received by the AUASB and these were considered as part of the development and finalisation of the Auditing Standard.

Regulatory Impact Statement

A Regulatory Impact Statement (RIA) has been prepared in connection with the preparation of ASA 2021-2 Amendments to Australian Auditing Standard ASA 560 Subsequent Events.  The RIA has been cleared by the Office of Best Practice Regulation (OBPR).

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Legislative Instrument: Auditing Standard ASA 2021-2 Amendments to Australian Auditing Standard ASA 560 Subsequent Events

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

Background

The AUASB is an independent statutory committee of the Australian Government established under section 227A of the Australian Securities and Investments Commission Act 2001, as amended (ASIC Act).  Under section 336 of the Corporations Act 2001, the AUASB may make Auditing Standards for the purposes of the corporations legislation.  These Auditing Standards are legislative instruments under the Legislative Instruments Act 2003.

Purpose of Auditing Standard ASA 2021-2

The purpose of ASA 2021-2 is to make amendments to the requirements and application and other explanatory material of the following Auditing Standard:

ASA 560 Subsequent Events (Issued October 2009 and amended to December 2015)

Main Features

ASA 2021-2 is being amended to achieve harmonisation with ISA (NZ) 560 Subsequent Events which was amended in February 2020. This Auditing Standard makes amendments to Australian Auditing Standard ASA 560 Subsequent Events made under Section 336 of the Corporations Act 2001 to clarify the timing of communications and possible actions the auditor may take when facts become known to the auditor after the financial report has been issued that, had it been known to the auditor at the date of the auditor’s report, may have caused the auditor to amend the auditor’s report.

Human Rights Implications

Australian Auditing Standards are issued by the AUASB in furtherance of the objective of facilitating the Australian economy. The standards do not diminish or limit any of the applicable human rights or freedoms, and thus do not raise any human rights issues.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

 

Overview

The Auditing and Assurance Standards Board (AUASB) has introduced ASA 2021-2 Amendments to Australian Auditing Standard ASA 560 Subsequent Events, which was enacted in 2021. This legislation is a response to the need for harmonisation with the New Zealand equivalent, ISA (NZ) 560 Subsequent Events, and aims to refine the guidance on the auditor's responsibilities concerning events that occur after the date of the auditor's report but before the financial report is issued. The AUASB, established under section 227A of the Australian Securities and Investments Commission Act 2001, has the authority to develop auditing standards pursuant to the Corporations Act 2001. The primary objective of ASA 2021-2 is to provide clarity on the timing of communications and the actions auditors may undertake when subsequent events come to light that might have altered the auditor's report had they been known at the time of the report's issuance. This amendment is operative for financial reporting periods commencing on or after 15 December 2021.

Scope and Application

Auditing Standard ASA 2021-2 Amendments to Australian Auditing Standard ASA 560 Subsequent Events, issued by the Auditing and Assurance Standards Board (AUASB), applies to auditors of financial reports for entities subject to the corporations legislation in Australia. The AUASB, a non-corporate Commonwealth entity established under the Australian Securities and Investments Commission Act 2001, has the authority to make Auditing Standards under Section 336 of the Corporations Act 2001. These standards are legislative instruments under the Legislative Instruments Act 2003. The purpose of ASA 2021-2 is to amend the requirements and explanatory material of ASA 560 Subsequent Events, clarifying the timing of communications and actions an auditor may take when new facts become known after the financial report has been issued. This amendment aims to achieve harmonisation with the International Standard on Auditing (NZ) 560 Subsequent Events, which was amended in February 2020. ASA 2021-2 is operative for financial reporting periods commencing on or after 15 December 2021. The AUASB consulted publicly during the development process, issuing Exposure Draft ED 03/21 for a 30-day comment period, and considered the submissions received. The Regulatory Impact Statement for this Auditing Standard has been cleared by the Office of Best Practice Regulation. This Legislative Instrument is compatible with human rights, as it does not diminish or limit any applicable human rights or freedoms.

Key Provisions

The Auditing and Assurance Standards Board (AUASB) has issued the Auditing Standard ASA 2021-2 Amendments to Australian Auditing Standard ASA 560 Subsequent Events, which amends the requirements and application of the existing ASA 560 Subsequent Events. This amendment, effective for financial reporting periods starting on or after 15 December 2021, seeks to harmonise Australian standards with the International Standard on Auditing (ISA) 560 Subsequent Events, as amended in February 2020 by the New Zealand equivalent (ISA (NZ) 560). The main feature of this amendment involves clarifying the timing of communications and actions that an auditor may take upon discovering facts after the financial report has been issued that could have altered the auditor's report had they been known at the time of issuance. The Auditing Standard ASA 2021-2 imposes specific obligations on auditors. These include the necessity for auditors to promptly communicate with those charged with governance when subsequent events that may require adjustments to the financial report are identified. The auditor must also determine whether the financial report requires amendments or if additional disclosures are necessary. Moreover, the standard stipulates that auditors should reassess the implications of such events on the auditor's report and take appropriate actions to ensure the financial report accurately reflects the entity’s financial position as of the reporting date. Failure to comply with the provisions of Auditing Standard ASA 2021-2 could result in various consequences. While the standard itself does not explicitly detail specific offences or penalties, non-compliance with auditing standards generally can lead to disciplinary actions by professional accounting bodies. Additionally, auditors may face legal liabilities if their failure to adhere to the standards results in misleading financial reports, potentially impacting stakeholders and leading to financial loss. Furthermore, the AUASB’s standards are integral to ensuring the integrity and transparency of financial reporting, and deviations from these standards could undermine public confidence in the auditing profession.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.