What are the types of subsequent events relevant to financial statement audits? Give one example of each type of subsequent event that might materially affect the financial statements

Subsequent events mean those events which are occuring after the balance sheet date and require special audit concern from the auditor

• Type 1 subsequent events: Those events which provide evidence of conditions that existed on the balance sheet date. Financial statements should be adjusted to reflect such condition and additional notes to financial information may also be provided, if so required
  EX: A lawsuit settlement for a distinct amount than was accrued
  
  
• Type 2 subsequent events: Those events which provides evidence of conditions that did not exited on balance sheet date but required to be disclosed. Events should be in financial terms and material in nature