Question - Section 560 of SAS No. 1 (AU Section 560.01-.09) defines subsequent events as events or transactions that "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 therefore require adjustment or disclosure in the statements."
a) Describe the two categories that subsequent events fall into that occur after the balance sheet date but before the issuance of the financial statements and the auditor's report.
b) What are the auditor's responsibility for subsequent events?