Opening Balances- Initial Audits Flashcards
What should the auditors do if prior F/S were audited by another firm?
1) Read the previous audit report
2) Request management to authorize the predecessor to respond to our inquiries and obtain audit documentation
3) Obtain sufficient evidence to prove that there were no material misstatements
4) make sure closing balances have properly been brought forward
If the new auditors discover possible material misstatements, what should happen?
Arrange a meeting with the client and predecessor auditor for a 3-way meeting
T/F: The new auditor should reference the predecessor auditor?
FALSE- YOU DO NOT REFERENCE THEM AT ALL AS THE BASIS FOR OTHER AUDITS
If you’re unable to obtain sufficient evidence about the opening balances what should happen?
Issue
1) A qualified opinion
2) A disclaimer of opinion
If there is a misstatement and the not adequately disclosed, what should happen?
Issue:
1) Qualified
2) Adverse opinion