Audit-Subsequent Events Procedure

SUBSEQUENT EVENTS PROCEDURE:

The clarified SAS addresses the auditor's responsibilities in connection with financial statements of a non-issuer included or incorporated by reference in a registration statement filed with the SEC under the Securities Act of 1933, as amended. The three categories of activities in completing the audit are completing field work, evaluating the findings and communicating with clients. One must perform a review for subsequent events to the date of our auditor's report or completion of the fieldwork. Procedure would include, but be limited to unrecorded liabilities in the audit program for accounts payable and other liabilities. The activities involved in completing the field work are (a) making subsequent events review, (b) reading minutes of meetings, (c) obtaining evidence concerning litigation, claims and assessments, (d) obtaining client representation letter, and (e) performing analytical procedure.

Subsequent events are events that occurs between the balance sheet date and the issuance date of the auditor's report(which is not the same as the date of the report) that may affect the financial statements on which the report is rendered. The subsequent event period extends from the balance sheet date to the end of field work on the engagement. These events provide additional evidence with respect to the conditions that existed at the date of the balance sheet and affect the estimates inherent in the process of preparing financial statements, as well as conditions that did not exist at the date of the balance sheet but arose subsequent to that date. There may be adjustment on the financial statements which requires disclosure and in very material cases by attaching pro-form data to financial statement.

The auditor is required by GAAS to search for and to evaluate subsequent events up to the date of the auditor's report, which should be as of the end of field work. This responsibility is discharged by (1) being alert for subsequent events in performing year-end substantive tests after the balance sheet date, and (2) performing specific procedures at or near the completion of field work.

The auditor has no responsibility to make inquiry or to perform any auditing procedures on subsequent events occurring after fieldwork but before issuance of report. When situation comes to auditor's attention, he or she is required to evaluate the item and consider its effect on the report that is being issued. The auditor may use the event date as the date of the auditor's report provided all subsequent events review procedures are performed for the period between the original report date and the event date. Alternatively, the auditor may use dual dating in which the report contains two dates: (1) the original date of the report, and (2) a date that refers to the subsequent