Initial Audit Engagements — Opening Balances
CAS 510
Initial Audit Engagements — Opening Balances
CAS 510
Definitions
- Initial audit engagement – An engagement in which either:
- The F/S for the prior period were not audited; or
- The F/S for the prior period were audited by a predecessor auditor
Audit Procedures
- The auditor should read the most recent F/S, if any, and the predecessor auditor’s report, if any, for information relevant to opening balances
- Obtain sufficient appropriate audit evidence about whether the opening balances contain material misstatements by:
- Determining whether the prior period’s closing balances have been correctly brought forward to the current period
- Determining whether the opening balances reflect the application of appropriate accounting policies; and
- Performing one or more of the following:
- Where the prior year F/S were audited, reviewing the predecessor auditor’s working papers to obtain evidence regarding the opening balances
- Evaluating whether audit procedures performed in the current period provide evidence relevant to the opening balances
- Performing specific audit procedures to obtain evidence regarding the opening balances
- If auditor determines that the opening balances contain material misstatements that affect the current year’s F/S, communicate the misstatements with the appropriate level of management and those charged with governance
- Obtain audit evidence about whether accounting policies reflected in the opening balances have been consistently applied in the current period
- If the prior year F/S were audited by a predecessor auditor that had a modified opinion, the current auditor should consider the event giving rise to the modified opinion in assessing the current period’s risk of material misstatement
- If auditor is unable to obtain sufficient appropriate evidence on the opening balances, express a qualified opinion or disclaim an opinion
- If the auditor concludes that the opening balances contain a misstatement that materially affects the current period’s F/S, express a qualified opinion or an adverse opinion
- If the auditor concludes that accounting policies are not consistently applied or if changes in accounting policies are not appropriately accounted for, issue a qualified or adverse opinion