Subsequent Events - What Accountants Need to Know

Course Overview

This overview course offers CPAs a concise introduction to subsequent events under U.S. GAAP. It highlights the key differences between recognized and nonrecognized subsequent events, summarizes the related reporting and disclosure requirements, and touches on management responsibilities and audit considerations. Designed as a quick refresher, the course also includes examples of common subsequent events encountered in practice.   

Learning Objectives

Upon completion of this course, you will be able to:

• Identify the key characteristics and timing of subsequent events under ASC 855

• Recognize common examples of subsequent events 

• Differentiate between recognized and nonrecognized subsequent events

• Recognize audit procedures and documentation requirements related to subsequent events

Introduction

Subsequent events can significantly affect how financial statements are interpreted, especially when they reveal new information about conditions that existed at the balance sheet date or signal major developments afterward. This course provides a practical, targeted overview of how U.S. GAAP addresses subsequent events, with a focus on what matters most to preparers, auditors, and users.

You'll learn how to distinguish between events that require adjustment and those that only require disclosure, and you'll see how these principles apply through common examples. For instance, if a major customer files for bankruptcy after year-end due to conditions that existed beforehand, that may require adjustment. But if a natural disaster strikes after the balance sheet date, it likely doesn't change the numbers (though disclosure may still be needed).

Subsequent events also play a role in going concern assessments. Post-year-end developments can reveal new risks or confirm existing doubts about a company's ability to continue operating, making evaluation and disclosure essential for users who rely on this information to understand future risks.

Monitoring subsequent events is also a smart risk management practice. It allows management to address issues early and helps ensure the financials reflect the best possible information. That requires collaboration between accounting, legal, and risk teams to stay ahead of any developments that may impact the company's financial health or require disclosure..