Also what about this question..”The extent of Audit procedures performed on corresponding figure is less compared to audit of current period figures reporting” Justify the statement with regard to AUDITOR’S DUTIES for reporting comparatives as per SA 710?? Is ans for this also same as audit procedures?
1.What are the auditor’s responsibilities in respect of corresponding figures?
2. Auditor’s responsibilities regarding comparatives.
3. Audit Procedures for comparatives
All the 3 questions above have same answers as per PM — “Audit Procedures for Comparatives” as per notes
1. The extent of Audit procedures performed on corresponding figure is less compared to audit of current period figures reporting.
2. The audit report of P Ltd. for the year 2013-14 contained a qualification regarding non-provision of doubtful debts. As the statutory auditor of the company for the year 2014-15,
how would you report, if:
(i) The company does not make provision for doubtful debts in 2014-15?
(ii) The company makes adequate provision for doubtful debts in 2014-15?
Above 2 questions have similar answer– Please refer chart in our notes which deals with what to do if previous period report is modified or if previous period misstatement is identified
Okk thank you sir….but i have not understood the meaning of the sentence “The extent of Audit procedures performed on corresponding figure is less compared to audit of current period figures reporting” what does it mean?
Content of answer as explained in suggested answer
1. Auditor should read FRF and ensure proper information regarding comparatives is given
2. In corresponding figure approach we only refer current year (So they are explaining corresponding figure approach if question is silent)
What to do in various situation(Explaining audit procedure in various situations)
3. If last year no audit is done then put OMP
4. If last year’s report is modified– and issue is unresolved
> if it doesn’t affect current year modify for last year and explain it affects comparability
> if it affects current year also modify for current year as well as last year
5. if last year misstatement is identified during current year audit procedures– and issue is unresolved
> modify for corresponding year just like point above
from above it is clear that simply explaining audit procedure in general for comparatives and audit procedures what if last year we find modified opinion or misstatements.
by doing this they want to say look only this much needs to be done for comparatives but we do indepth checking for current year by performing various audit procedures. they have not written any conclusion of answer they want us to understand invisible and interpret 🙂
Below is detailed answer
Comparatives: As per SA 710 “Comparative Information—Corresponding Figures and Comparative Financial Statements” the following are the broad principles”
(i) The auditor should obtain sufficient appropriate audit evidence about whether the comparative information included in the financial statements has been presented, in all material respects, in accordance with the requirements for comparative information in the applicable financial reporting framework.
(ii) When corresponding figures are presented, the auditor’s opinion shall not refer to the corresponding figures because the auditor’s opinion is on the current period financial statements as a whole, including the corresponding figures.
(iii) When the auditor’s report on the prior period, as previously issued, included a qualified opinion, disclaimer of opinion, or an adverse opinion and the matter which gave rise to the modification in the audit report is unresolved, the auditor shall modify the auditor’s opinion on the current period’s financial statements. In the Basis for Modification paragraph in the auditor’s report, the auditor shall either:
(a) Refer to both the current period’s figures and the corresponding figures in the description of the matter giving rise to the modification when the effects or possible effects of the matter on the current period’s figures are material; or
(b) In other cases, explain that the audit opinion has been modified because of the effects or possible effects of the unresolved matter on the comparability of the current period’s figures and the corresponding figures.
(iv) If the auditor obtains audit evidence that a material misstatement exists in the prior period financial statements on which an unmodified opinion has been previously issued, the auditor shall verify whether the misstatement has been dealt with as required under the applicable financial reporting framework and, if that is not the case, the auditor shall express a qualified opinion or an adverse opinion in the auditor’s report on the current period financial statements, modified with respect to the corresponding figures included therein.
(v) If the prior period financial statements were not audited, the auditor shall state in an Other Matter paragraph in the auditor’s report that the corresponding figures are unaudited. Such a statement does not, however, relieve the auditor of the requirement to obtain sufficient appropriate audit evidence that the opening balances do not contain misstatements that materially affect the current period’s financial statements.