ASA 710 - Comparative Information - Corresponding Figures and Comparative Financial Reports - October 2009
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The Auditing and Assurance Standards Board (AUASB) made Auditing Standard ASA 710 Comparative Information‑Corresponding Figures and Comparative Financial Reports pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001, on 27 October 2009.
This compiled version of ASA 710 incorporates subsequent amendments contained in other Auditing Standards made by the AUASB up to and including 15 March 2023 (see Compilation Details).
Auditing Standard ASA 710
Comparative Information‑Corresponding Figures and Comparative Financial Reports
Application
Aus 0.1 This Auditing Standard applies to:
(a) an audit of a financial report for a financial year, or an audit of a financial report for a half‑year, in accordance with the Corporations Act 2001; and
(b) an audit of a financial report, or a complete set of financial statements, for any other purpose.
Aus 0.2 This Auditing Standard also applies, as appropriate, to an audit of other historical financial information.
Operative Date
Aus 0.3 This Auditing Standard is operative for financial reporting periods commencing on or after 1 January 2010. [Note: For operative dates of paragraphs changed or added by an Amending Standard, see Compilation Details.]
Introduction
Scope of this Auditing Standard
This Auditing Standard deals with the auditor’s responsibilities relating to comparative information in an audit of a financial report. When the financial report of the prior period has been audited by a predecessor auditor or was not audited, the requirements and guidance in ASA 510[1] regarding opening balances also apply.
The Nature of Comparative Information
The nature of the comparative information that is presented in an entity’s financial report depends on the requirements of the applicable financial reporting framework. There are two different broad approaches to the auditor’s reporting responsibilities in respect of such comparative information: corresponding figures and comparative financial reports. The approach to be adopted is often specified by law or regulation but may also be specified in the terms of engagement.
The essential audit reporting differences between the approaches are:
For corresponding figures, the auditor’s opinion on the financial report refers to the current period only; whereas
For comparative financial reports, the auditor’s opinion refers to each period for which a financial report is presented.
Section Introduction - ASA 710 - Comparative Information - Corresponding Figures and Comparative Financial Reports - October 2009 - Introduction | Zoe
This Auditing Standard addresses separately the auditor’s reporting requirements for each approach.
Effective Date
[Deleted by the AUASB. Refer Aus 0.3]
Objectives
The objectives of the auditor are:
To obtain sufficient appropriate audit evidence about whether the comparative information included in the financial report has been presented, in all material respects, in accordance with the requirements for comparative information in the applicable financial reporting framework; and
To report in accordance with the auditor’s reporting responsibilities.
Definitions
For the purposes of this Auditing Standard, the following terms have the meanings attributed below:
Comparative information means the amounts and disclosures included in the financial report in respect of one or more prior periods in accordance with the applicable financial reporting framework.
Corresponding figures mean comparative information where amounts and other disclosures for the prior period are included as an integral part of the current period financial report, and are intended to be read only in relation to the amounts and other disclosures relating to the current period (referred to as “current period figures”). The level of detail presented in the corresponding amounts and disclosures is dictated primarily by its relevance to the current period figures.
Comparative financial reports means comparative information where amounts and other disclosures for the prior period are included for comparison with the financial report of the current period but, if audited, are referred to in the auditor’s opinion. The level of information included in those comparative financial reports is comparable with that of the financial report of the current period.
Aus 6.1 In accordance with the applicable financial reporting framework of the Corporations Act 2001 and Australian Accounting Standards, comparative information refers to corresponding figures.
For purposes of this Auditing Standard, references to “prior period” should be read as “prior periods” when the comparative information includes amounts and disclosures for more than one period.
Requirements
Audit Procedures
The auditor shall determine whether the financial report includes the comparative information required by the applicable financial reporting framework and whether such information is appropriately classified. For this purpose, the auditor shall evaluate whether:
The comparative information agrees with the amounts and other disclosures presented in the prior period or, when appropriate, have been restated; and
The accounting policies reflected in the comparative information are consistent with those applied in the current period or, if there have been changes in accounting policies, whether those changes have been properly accounted for and adequately presented and disclosed.
If the auditor becomes aware of a possible material misstatement in the comparative information while performing the current period audit, the auditor shall perform such additional audit procedures as are necessary in the circumstances to obtain sufficient appropriate audit evidence to determine whether a material misstatement exists. If the auditor had audited the prior period’s financial report, the auditor shall also follow the relevant requirements of ASA 560.[2] If the prior period financial report is amended, the auditor shall determine that the comparative information agrees with the amended financial report.
As required by ASA 580,[3] the auditor shall request written representations for all periods referred to in the auditor’s opinion. The auditor shall also obtain a specific written representation regarding any restatement made to correct a material misstatement in the prior period financial report that affects the comparative information. (Ref: Para. A1)
Audit Reporting
Corresponding Figures
When corresponding figures are presented, the auditor’s opinion shall not refer to the corresponding figures except in the circumstances described in paragraphs 11, 12, and 14 of this Auditing Standard. (Ref: Para. A2)
If the auditor’s report on the prior period, as previously issued, included a qualified opinion, a disclaimer of opinion, or an adverse opinion and the matter which gave rise to the modification is unresolved, the auditor shall modify the auditor’s opinion on the current period’s financial report. In the Basis for Modification paragraph in the auditor’s report, the auditor shall either:
Refer to both the current period’s figures and the corresponding figures in the description of the matter giving rise to the modification when the effects or possible effects of the matter on the current period’s figures are material; or
In other cases, explain that the audit opinion has been modified because of the effects or possible effects of the unresolved matter on the comparability of the current period’s figures and the corresponding figures.(Ref: Para. A3‑A5)
If the auditor obtains audit evidence that a material misstatement exists in the prior period financial report on which an unmodified opinion has been previously issued, and the corresponding figures have not been properly restated or appropriate disclosures have not been made, the auditor shall express a qualified opinion or an adverse opinion in the auditor’s report on the current period financial report, modified with respect to the corresponding figures included therein. (Ref: Para. A6)
Prior Period Financial Report Audited by a Predecessor Auditor
If the financial report of the prior period was audited by a predecessor auditor and the auditor is not prohibited by law or regulation from referring to the predecessor auditor’s report on the corresponding figures and decides to do so, the auditor shall state in an Other Matter paragraph in the auditor’s report:
That the financial report of the prior period was audited by the predecessor auditor;
The type of opinion expressed by the predecessor auditor and, if the opinion was modified, the reasons therefore; and
The date of that report. (Ref: Para. A7)
Prior Period Financial Report Not Audited
If the prior period financial report was not audited, the auditor shall state in an Other Matter paragraph in the auditor’s report that the corresponding figures are unaudited. Such a statement does not, however, relieve the auditor of the requirement to obtain sufficient appropriate audit evidence that the opening balances do not contain misstatements that materially affect the current period’s financial report.[4] (Ref: Para. A8)
Comparative Financial Reports
When comparative financial reports are presented, the auditor’s opinion shall refer to each period for which a financial report is presented and on which an audit opinion is expressed. (Ref: Para. A9‑A10)
When reporting on a prior period financial report in connection with the current period’s audit, if the auditor’s opinion on such a prior period financial report differs from the opinion the auditor previously expressed, the auditor shall disclose the substantive reasons for the different opinion in an Other Matter paragraph in accordance with ASA 706.[5] (Ref: Para. Aus A8.1, A10)
Prior Period Financial Report Audited by a Predecessor Auditor
If the financial report of the prior period was audited by a predecessor auditor, in addition to expressing an opinion on the current period’s financial report, the auditor shall state in an Other Matter paragraph:
that the financial report of the prior period was audited by a predecessor auditor;
the type of opinion expressed by the predecessor auditor and, if the opinion was modified, the reasons therefore; and
the date of that report,
unless the predecessor auditor’s report on the prior period’s financial report is reissued with the financial report.
If the auditor concludes that a material misstatement exists that affects the prior period financial report on which the predecessor auditor had previously reported without modification, the auditor shall communicate the misstatement with the appropriate level of management and, and unless all of those charged with governance are involved in managing the entity,[6] those charged with governance and request that the predecessor auditor be informed. If the prior period financial report is amended, and the predecessor auditor agrees to issue a new auditor’s report on the amended financial report of the prior period, the auditor shall report only on the current period. (Ref: Para. Aus A8.1, Aus A12.1, A13)
Prior Period Financial Report Not Audited
If the prior period financial report was not audited, the auditor shall state in an Other Matter paragraph that the comparative financial report is unaudited. Such a statement does not, however, relieve the auditor of the requirement to obtain sufficient appropriate audit evidence that the opening balances do not contain misstatements that materially affect the current period’s financial report.[7] (Ref: Para. A12)
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Application and Other Explanatory Material
Audit Procedures
Written Representations (Ref: Para. 9)
In the case of a comparative financial report, the written representations are requested for all periods referred to in the auditor’s opinion because management needs to reaffirm that the written representations it previously made with respect to the prior period remain appropriate. In the case of corresponding figures, the written representations are requested for the financial report of the current period only because the auditor’s opinion is on that financial report, which includes the corresponding figures. However, the auditor requests a specific written representation regarding any restatement made to correct a material misstatement in the prior period financial report that affects the comparative information.
Audit Reporting
Corresponding Figures
No Reference in Auditor’s Opinion (Ref: Para. 10)
The auditor’s opinion does not refer to the corresponding figures because the auditor’s opinion is on the current period financial report as a whole, including the corresponding figures.
Modification in Auditor’s Report on the Prior Period Unresolved (Ref: Para. 11)
When the auditor’s report on the prior period, as previously issued, included a qualified opinion, a disclaimer of opinion, or an adverse opinion and the matter which gave rise to the modified opinion is resolved and properly accounted for or disclosed in the financial report in accordance with the applicable financial reporting framework, the auditor’s opinion on the current period need not refer to the previous modification.
When the auditor’s opinion on the prior period, as previously expressed, was modified, the unresolved matter that gave rise to the modification may not be relevant to the current period figures. Nevertheless, a qualified opinion, a disclaimer of opinion, or an adverse opinion (as applicable) may be required on the current period’s financial report because of the effects or possible effects of the unresolved matter on the comparability of the current and corresponding figures.
Illustrative examples of the auditor’s report if the auditor’s report on the prior period included a modified opinion and the matter giving rise to the modification is unresolved are contained in Illustrations 1, [Aus] 1A, 2 and [Aus] 2A of Appendix 1.
Misstatement in Prior Period Financial Report (Ref: Para. 12)
When a prior period financial report that is misstated has not been amended and an auditor’s report has not been reissued, but the corresponding figures have been properly restated or appropriate disclosures have been made in the current period financial report, the auditor’s report may include an Emphasis of Matter paragraph describing the circumstances and referring to, where relevant, disclosures that fully describe the matter that can be found in the financial report (see ASA 706).
Prior Period Financial Report Audited by a Predecessor Auditor (Ref: Para. 13)
An illustrative example of the auditor’s report if the prior period financial report was audited by a predecessor auditor and the auditor is not prohibited by law or regulation from referring to the predecessor auditor’s report on the corresponding figures is contained in Illustration 3 of Appendix 1.
Prior Period Financial Report Not Audited (Ref: Para. 14)
If the auditor is unable to obtain sufficient appropriate audit evidence regarding the opening balances, the auditor is required by ASA 705[8] to express a qualified opinion or disclaim an opinion on the financial report, as appropriate, in accordance with ASA 705. If the auditor encountered significant difficulty in obtaining sufficient appropriate audit evidence that the opening balances do not contain misstatements that materially affect the current period’s financial report, the auditor may determine this to be a key audit matter in accordance with ASA 701.[9]
Comparative Financial Reports
Aus A8.1 In respect of audit engagements conducted under the Corporations Act 2001, the auditor’s opinion refers to a financial report for the current period, which include corresponding figures, and not to comparative financial report(s). Consequently, paragraphs 15, 16, 17, 18 and 19, and related paragraphs A9, A10, A11, and A12 have no application to audit engagements under the Corporations Act 2001.
Reference in Auditor’s Opinion (Ref: Para. 15)
Because the auditor’s report on comparative financial reports applies to the financial report for each of the periods presented, the auditor may express a qualified opinion or an adverse opinion, disclaim an opinion, or include an Emphasis of Matter paragraph with respect to one or more periods, while expressing a different auditor’s opinion on the financial report of the other period.
An illustrative example of the auditor’s report if the auditor is required to report on both the current and the prior period financial reports in connection with the current year’s audit and the prior period included a modified opinion and the matter giving rise to the modification is unresolved, is contained in Illustration 4 of Appendix 1.
Opinion on the Prior Period Financial Report Different from Previous Opinion (Ref: Para. 16)
When reporting on the prior period financial report in connection with the current period’s audit, the opinion expressed on the prior period financial report may be different from the opinion previously expressed if the auditor becomes aware of circumstances or events that materially affect the financial report of a prior period during the course of the audit of the current period. In some jurisdictions, the auditor may have additional reporting responsibilities designed to prevent future reliance on the auditor’s previously issued report on the prior period financial report.
Prior Period Financial Report not Audited (Ref: Para. 19)
If the auditor is unable to obtain sufficient appropriate audit evidence regarding the opening balances, the auditor is required by ASA 705 to express a qualified opinion or disclaim an opinion on the financial report, as appropriate, in accordance with ASA 705. If the auditor encountered significant difficulty in obtaining sufficient appropriate audit evidence that the opening balances do not contain misstatements that materially affect the current period’s financial report, the auditor may determine this to be a key audit matter in accordance with ASA 701.
Prior Period Financial Report Audited by a Predecessor Auditor (Ref: Para. 18)
Aus A12.1 In respect of audit engagements conducted under the Corporations Act 2001, if the prior period auditor’s report on the prior period financial report is amended by a predecessor auditor during the current financial year, the auditor is unable to express an opinion in the current period auditor’s report in respect of that amendment.
The predecessor auditor may be unable or unwilling to reissue the auditor’s report on the prior period financial report. An Other Matter paragraph of the auditor’s report may indicate that the predecessor auditor reported on the financial report of the prior period before amendment.
In addition, if the auditor is engaged to audit and obtains sufficient appropriate audit evidence to be satisfied as to the appropriateness of the amendment, the auditor’s report may also include the following paragraph:
As part of our audit of the 20X2 financial report, we also audited the adjustments described in Note X that were applied to amend the 20X1 financial report. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 20X1 financial report of the entity other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 20X1 financial report taken as a whole.