Audit ProceduresAudit Procedures

Audit Procedures

Opening Balances

1. The auditor shall read the most recent financial report, if any, and the predecessor auditor’s report thereon, if any, for information relevant to opening balances, including disclosures.
2. The auditor shall obtain sufficient appropriate audit evidence about whether the opening balances contain misstatements that materially affect the current period’s financial report by: (Ref: Para. A1‑A2)
   1. Determining whether the prior period’s closing balances have been correctly brought forward to the current period or, when appropriate, have been restated;
   2. Determining whether the opening balances reflect the application of appropriate accounting policies; and
   3. Performing one or more of the following: (Ref: Para. A3‑A7)
      1. Where the prior year financial report was audited, reviewing the predecessor auditor’s working papers to obtain evidence regarding the opening balances;
      2. Evaluating whether audit procedures performed in the current period provide evidence relevant to the opening balances; or
      3. Performing specific audit procedures to obtain evidence regarding the opening balances.
3. If the auditor obtains audit evidence that the opening balances contain misstatements that could materially affect the current period’s financial report, the auditor shall perform such additional audit procedures as are appropriate in the circumstances to determine the effect on the current period’s financial report. If the auditor concludes that such misstatements exist in the current period’s financial report, the auditor shall communicate the misstatements with the appropriate level of management and those charged with governance in accordance with ASA 450.[3]

Consistency of Accounting Policies

1. The auditor shall obtain sufficient appropriate audit evidence about whether the accounting policies reflected in the opening balances have been consistently applied in the current period’s financial report, and whether changes in the accounting policies have been appropriately accounted for and adequately presented and disclosed in accordance with the applicable financial reporting framework.

Relevant Information in the Predecessor Auditor’s Report

1. If the prior period’s financial report was audited by a predecessor auditor and there was a modification to the opinion, the auditor shall evaluate the effect of the matter giving rise to the modification in assessing the risks of material misstatement in the current period’s financial report in accordance with ASA 315.[4]