Why subsequent events between the balance sheet date and the audit report date get missed

Subsequent events get missed because SA 560 defines the active review period as running all the way to the date the audit report is signed — not the balance sheet date, not the date the draft financial statements were prepared — and in practice, most subsequent events procedures (minutes review, management inquiry, a final look at bank and legal correspondence) get performed once, at a point before final sign-off, with nothing specifically re-checking for events in the gap between that procedure and the actual signing date, which can be days or weeks later.

Where the gap specifically opens

• Subsequent events procedures are completed as a standard fieldwork step, and then internal review, partner sign-off, and quality control add further days or weeks before the report is actually dated and signed, with no fresh procedure covering that added time.
• A board meeting or a significant customer/vendor development occurs during the review and sign-off period itself, and nobody is specifically tasked with monitoring for it once fieldwork has formally concluded.
• The subsequent events inquiry to management is a single point-in-time conversation, treated as closed, rather than a standing question kept open until the actual signing date.
• A later-dated event (a litigation settlement, a customer going into insolvency) is disclosed to the company's legal or finance team internally but never specifically routed to the audit team because the audit is perceived to have already finished.

What closes this specific gap

A final subsequent events procedure performed as close as practically possible to the actual signing date — not to the end of fieldwork — along with a standing instruction to management to flag anything material in between, is what actually covers the full window the standard requires, rather than just the part of it that happened to fall within the fieldwork schedule.