A1 - Reports on comparative F/S

Question 1

If the updated opinion differs from the previous opinion, the auditors should disclose the reason(s) in an emphasis-of-matter or other-matter paragraph that disclosed the following:

Answer 1

“DORCS” change their mind

Date of the auditor’s previous report

Opinion type previously issued

Reason for the prior opinion

Changes that have occurred

Statement that the “opinion…is different”

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Question 2

Predecessor auditors may reissue their report on financial statements as long as the report is still appropriate. However, the current presentation of the prior period statements or the occurrence of subsequent events may make the previous report inappropriate. In deciding whether to reissue their report, the predecessor auditors should:

Answer 2

1. Read the statements for the current period
2. Compare the statements audited with current period statements
3. Obtain a letter of representation from the successor auditor.
4. Inquire of and obtain a letter of representation from management at or near the date of reissuance.
5. Date the report as appropriate:
   
   • Unrevised – Use the original report date in any reissue of a previous report
   • Revised – Dual date (covered letter) is used in the event that the predecessor auditor revises the report.

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Question 3

When the successor auditor does not present the predecessor auditor’s report, the successor auditor should express an opinion on the current period F/S only and indicate in an other-matter paragraph:

Answer 3

• That the F/S of the prior period were audited by a predecessor auditor (the predecessor auditors should not be named unless the practice of the predecessors was acquired by or merged with that of the successor.
• The type of opinion expressed by the predecessor auditor and, if the opinion was modified, the reasons for the modification.
• The nature of any emphasis of matter or other matter paragraph included in the predecessor auditor’s report.
• The date of the predecessor auditor’s report.

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Question 4

When the current period financial statements are audited and presented in comparative form with prior period F/S that were reviewed or compiled, and the report of the prior period is not reissued, the auditor should include an other matter paragraph in the auditor’s report that includes:

Answer 4

1. The service (review or compilation) performed in the prior period;
2. The date of the period report;
3. A description of any material modifications described in the report; and
4. A statement that the services was less in scope than an audit and does not provide the basis for expressing an opinion on the F/S.

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Question 5

If the prior period statements were not audited, reviewed, or compiled, the F/S should be clearly marked, and the auditor’s report should include an other matter paragraph to indicate that the auditor _____.

Answer 5

Did not audit, review, or compile the prior period F/S and that the auditor assumes no responsibility for them.

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