NCOMING AUDITOR

When the financial statements of the prior period were audited by another auditor,

● The predecessor auditor may reissue the audit report on the prior period with the

incoming auditor only reporting on the current period; or

● The incoming auditor’s report should state that the prior period was audited by another

auditor and the incoming auditor’s report should indicate:

o That the financial statements of the prior period was audited by another auditor

o The type of report issued by the predecessor auditor, and if the report was

modified, the reasons; therefore

o Date of the report

PRIOR PERIOD FINANCIAL STATEMENTS NOT AUDITED

1. When the prior financial statements were not audited, the incoming auditor should state

in the auditor’s report that the comprehensive financial statements are unaudited

2. If the prior period financial statements were materially misstated, the auditor should

request management to revise the prior year’s figures or if management refuses to do

so, appropriately modify the report

OTHER INFORMATION IN DOCUMENTS CONTAINING AUDITED FINANCIAL STATEMENTS

(BASED ON PSA 720)

1. An entity ordinarily issues on an annual basis a document which includes its audited

financial statements together with the auditor’s report thereon, also called “annual

report”.

Material inconsistencies

2. This exists when the other information contradicts information contained in the audited

financial statements

3. If, on reading the other information, the auditor identifies material inconsistency, the

auditor should determine whether the financial statements need to be amended

● If the amendment is necessary and the entity refuses to make an

amendment, the auditor should express a qualified or adverse opinion

● If the amendment is necessary and the entity refuses to make an

amendment, the auditor should consider including in the auditor auditor’s

report an emphasis of matter paragraph.