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John Selwood's audit clinic

John considers questions on audit reports including some interesting issues for small company reporting.

I want to start by setting out the right approach to auditing opening balances in this situation. Auditors are responsible for obtaining sufficient appropriate evidence on the opening balances, such as stock. Your audit work on the 30 September 2018 accounts has probably provided lots of good evidence on certain opening balances and it can be straightforward to supplement your evidence with analytical procedures and, perhaps, tests of detail.

In this situation, testing existence of opening stock is always one of the more difficult areas. However, have you requested access to the audit working papers of the previous auditor? It is often possible to view their work to satisfy yourself that there is sufficient evidence.