Incoming Auditor - Additional RequiremenIncoming Auditor - Additional Requirements

Incoming Auditor - Additional Requirements

Prior Period Financial Report Audited by Another Auditor

20 In some jurisdictions, (other than Australia), the incoming auditor is permitted to refer to the predecessor auditor’s report on the comparatives in the incoming auditor’s report for the current period.

21 Where the financial report of the prior period was audited by another auditor, and the incoming auditor is unable to obtain sufficient appropriate audit evidence regarding the comparatives, the current auditor’s report shall be qualified on the basis of a scope limitation. The qualification section shall also refer to the predecessor auditor’s report and shall indicate:

(a) that the financial report of the prior period was audited by another auditor and the name of that auditor;

(b) the type of report issued by the predecessor auditor and, if the report was modified, the reasons therefore; and

(c) the date of that report.

Prior Period Financial Report Not Audited

22 When the financial report of the prior period has not been audited, the auditor would nonetheless consider whether the comparatives are materially misstated. In rare and exceptional circumstances, the audit procedures performed may enable the auditor to obtain sufficient appropriate audit evidence so as to not qualify the audit opinion regarding the comparatives. Ordinarily, these procedures will not provide sufficient appropriate audit evidence as to whether the comparatives are free of material misstatement, and therefore the auditor could not provide the same level of assurance on the comparatives as for the amounts and other disclosures relating to the current period.

23 When the prior period financial report was not audited, and the incoming auditor is unable to obtain sufficient appropriate audit evidence regarding the comparatives, the incoming auditor shall qualify the auditor’s report on the basis that the comparatives are unaudited and that no opinion on them is expressed.

24 Under ASA 510, the auditor needs to perform appropriate audit procedures regarding opening balances of the current period.

25 The auditor shall encourage clear disclosure in the financial report that the comparatives are unaudited.

26 In situations where the incoming auditor identifies that the comparatives are materially misstated, the auditor shall request management and those charged with governance to revise the comparatives and if management and those charged with governance refuse to do so, appropriately modify the auditor’s report.