Chapter 1 Section 4: Reports on Comparative Financial Statements

Question 1

What if, this year, you find something that affects the prior statements and the opinion that was expressed?

Answer 1

Update the opinion in this year’s report

Question 2

What is the format used when the updated opinion differs from the previous one?

DORCS

Answer 2

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."

Question 3

If the report of the predecessor auditor is presented, what should who do?

Answer 3

The old auditor should:
Read the current year statements
Compare the statements audited with the current statements
Obtain a letter of rep from the successor auditor
Inquire of and obtain a letter of rep from management

Question 4

How should the predecessor’s report be dated when unrevised?

Revised?

Answer 4

The original date

Dual date

Question 5

If the report of the predecessor auditor is not presented, what should who do?

Answer 5

The new auditor should indicate in an other-matter paragraph that:
the financials of the prior period were audited by an unnamed (usually) predecessor auditor
The type of opinion expressed by the predecessor, if you change it, and why you would change it
The nature of any emphasis or other matter paragraph included in the predecessor’s report
The date of the predecessor’s report

Question 6

What if the prior period financials were reviewed or compiled?

Answer 6

Include an other-matter paragraph saying:
If it was reviewed or compiled
The date of the prior period report
Describe material modifications
Statement that it was less than the scope of an audit

Question 7

What if the prior period financials were not reviewed, compiled, or audited?

Answer 7

Include an other-matter paragraph saying that none of that happened and that you assume no responsibility for them