David Stevens from the technical advisory service shares answers to some frequently asked audit-related questions.
Access to the technical enquiry service is one of the benefits of your ICAEW membership. We are here to support you, providing assistance, interpreting the relevant standards and practical guidance, or even just a second opinion on the issues you face. We also endeavour to provide you with technical references to support our advice and draw on sources such as technical releases and guidance from the Audit & Assurance Faculty, and of course the International Standards on Auditing (ISAs).
Prior year figures unaudited
Q. My client did not require an audit for the previous period. If I am giving an opinion on the financial statements for the current period, is a limitation of scope qualification inevitable?
A. Such a qualification is not inevitable but the auditor will need to get sufficient appropriate audit evidence to support the opening balances. In the absence of this a qualification will be necessary. ISA 710 para 14 also requires an Other Matter paragraph in the audit report explaining that the prior year comparatives were not audited. It is recommended that the comparative columns are headed up as ‘unaudited’. It is also worth noting para 8 of ISA 710. While this does not require the auditor to undertake much positive work on the comparatives, it does require the auditor to react to any evidence obtained in the current year audit that might call into question the comparatives.
This is an extract from an article in the July/August 2013 edition of Audit & Beyond, the magazine of the Audit and Assurance Faculty.
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