In short
In an initial audit engagement, the auditor obtains sufficient appropriate evidence that the opening balances don't contain misstatements that materially affect the current period, and that accounting policies have been applied consistently.
Key takeaways
- Procedures include reviewing the predecessor auditor's working papers and testing opening balances through current-period procedures.
- If the auditor can't get enough evidence, the opinion is qualified or disclaimed for the effect on results and cash flows.
- Communication with the predecessor auditor is required before accepting the engagement.
Where it's tested
AUD: Audit Planning & Materiality — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Why does an auditor set performance materiality at an amount lower than overall materiality?