Comparative Financial Statements w/ report

Question 1

What type of paragraph is added to the report if PY financial statements were audited by predecessor, and are not restated

Answer 1

Other-matters

Question 2

What does the other-matters paragraph contain when FS are not reissued

Answer 2

(1) that the financial statements of the prior period were audited by a predecessor auditor; (2) the type of opinion given (and the reason for any modification); (3) the nature of any emphasis-of-matter paragraph or other-matter paragraph; and (4) the date of the predecessor’s report.

Question 3

What should the predecessor do if FS are reissued

Answer 3

The predecessor should obtain a representation letter from the (successor) auditor regarding matters that might affect the predecessor’s prior period audit report, but the predecessor should not refer to the successor auditor in the predecessor’s reissued audit report.

Question 4

What if PY financials are not audited, but were compiled or reviewed, but not reissued

Answer 4

the auditor should include an other-matter paragraph that identifies: (1) the nature of the service performed in the prior period; (2) a description of any modifications noted; (3) a statement that the service does not provide a basis for an opinion; and (4) the date of the report.

Question 5

What if PY financials were not audited, reviewed, or compiled

Answer 5

the auditor’s report should include an other-matter paragraph pointing out that fact.

Question 6

When financial statements contain a departure from GAAP because, due to unusual circumstances, the statements would otherwise be misleading, the auditor should explain the unusual circumstances in a separate paragraph and express an opinion that is

Answer 6

Unmodified and include emphasis of the matter paragraph