The company did not take physical inventories and we were not able to apply other auditing procedures to satisfy ourselves as to inventory quantities and the cost of property and equipment, the scope of our work was not sufficient to enable us to express, and we do not express, an opinion on these financial statements.
If the predecessor auditor revises the report or if the financial statements are adjusted, he or she should dual-date the report.
.43if a company issues financial statements that purport to present financial position and results of operations but omits the related statement of cash flows, the auditor will normally conclude that the omission requires qualification of his opinion.
The auditor's consideration of materiality is a matter of professional judgment and is influenced by his or her perception of the needs of a reasonable person who will rely on the financial statements.
Opinion as to whether the financial statements present fairly, in all material respects, the financial position of the company as of the balance sheet date and the results of its operations and its cash flows for the period then ended in conformity with generally accepted accounting principles.
The period between the date of the auditors report and the issuance of the financial statements exceeds approximately three weeks, it would be prudent for the auditor to call the client and inquire about subsequent events.
If the financial statement disclosures are not adequate, the auditor should address the lack of disclosure as discussed beginning at paragraph .
Example of the dual dating of an auditors report is as follows:February 16, 20x1, except for note x as to which the date is february 25, 20x1.
The following is an example of an explanatory paragraph that may be appropriate when an auditor issues an updated report on the financial statements of a prior period that contains an opinion different from the opinion previously expressed:Report of independent registered public accounting firm.
Dual dated audit report example
Form of the auditor's standard report on comparative financial statements8 is as follows:Report of independent registered public accounting firm.
Such an opinion is expressed when, in the auditor's judgment, the financial statements taken as a whole are not presented fairly in conformity with generally accepted accounting principles.
Auditor believes, on the basis of his or her audit, that the financial statements contain a departure from generally accepted accounting principles, the effect of which is material, and he or she has concluded not to express an adverse opinion (paragraphs .
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
Accounting firms individually contributing less than 5% of total audit hours(1) the number of other accounting firms individually representing less than 5% of total audit hours and (2) the aggregate percentage of total audit hours of such firms as a single number or within an appropriate range, as is required to be reported on form ap.
Our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to examine evidence regarding the foreign affiliate investment and earnings, the financial statements referred to in the first paragraph above present fairly, in all material respects, the financial position of x company as of december 31, 20x2 and 20x1, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the united states of america.
Have audited the accompanying balance sheet of x company as of december 31, 20xx, and the related statements of income, retained earnings, and cash flows for the year then ended.
When restrictions that significantly limit the scope of the audit are imposed by the client, ordinarily the auditor should disclaim an opinion on the financial statements.
Disclosed in note x to the financial statements, the company adopted, in 20x2, the first-in, first-out method of accounting for its inventories, whereas it previously used the last-in, first-out method.
Example dual dated financial statements
Our opinion, the 20x2 financial statements referred to above present fairly, in all material respects, the financial position of abc company as of december 31, 20x2, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the united states of america.
The auditor may be asked to report on one basic financial statement and not on the others.
Its purpose is to determine whether the financial statements being reported on require adjustment or additional disclosures.
Certain circumstances, while not affecting the auditor's unqualified opinion on the financial statements, may require that the auditor add an explanatory paragraph (or other explanatory language) to his or her report.
Our responsibility is to express an opinion on these financial statements based on our audit.
In either circumstance, the auditor should dual date his or her report or date it as of the event.
The auditor reissues the report and uses the original report date, he or she does not have to investigate or inquire about events affecting the financial statements reported on that may have occurred between the original date and the reissuance date.
To the financial statements "taken as a whole" applies equally to a complete set of financial statements and to an individual financial statement (for example, to a balance sheet) for one or more periods presented.
.69if, in an updated report, the opinion is different from the opinion previously expressed on the financial statements of a prior period, the auditor should disclose all the substantive reasons for the different opinion in a separate explanatory paragraph(s) preceding the opinion paragraph of his or her report.
Sample dual dating financial statements
.17cfollowing is an example of an explanatory paragraph when the company has made a change in accounting principle other than a change due to the adoption of a new accounting pronouncement:As discussed in note x to the financial statements, the company has elected to change its method of accounting for [describe accounting method change] in [year(s) of financial statements that reflect the accounting method change].
Accounting firms individually contributing 5% or more of total audit hoursfor each firm, (1) the firm's legal name, (2) the city and state (or, if outside the united states, city and country) of headquarters' office, and (3) percentage of total audit hours as a single number or within an appropriate range, as is required to be reported on form ap; and.
Have audited the balance sheet of abc company as of december 31, 20x2, and the related statements of income, retained earnings, and cash flows for the year then ended.
Of as 2810, evaluating audit results) and that its effect is to cause the financial statements to be materially misstated, he or she should express a qualified or an adverse opinion.
Matters, other than those involving a change or changes in accounting principles, affecting the comparability of the financial statements with those of the preceding period.
The auditor dates the report as of the date of the subsequent event rather than dual dating the report he or she should extend the subsequent events review to that date.
When such information is set forth elsewhere in a report to shareholders, or in a prospectus, proxy statement, or other similar report, it should be referred to in the financial statements.
Have audited the accompanying balance sheets of x company as of december 31, 20x2 and 20x1, and the related statements of income and retained earnings for the years then ended.
Subsequent events requiring disclosure some subsequent events only require disclosure of information in the notes to the financial statements.
Our opinion, except that the omission of a statement of cash flows results in an incomplete presentation as explained in the preceding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of x company as of december 31, 20x2 and 20x1, and the results of its operations for the years then ended in conformity with accounting principles generally accepted in the united states of america.
Consequently, a predecessor auditor should (a) read the financial statements of the current period, (b) compare the prior-period financial statements that he or she reported on with the financial statements to be presented for comparative purposes, and (c) obtain representation letters from management of the former client and from the successor auditor.
Ordinarily, the auditor's report on comparative financial statements should be dated as of the date of completion of fieldwork for the most recent audit.
Our report dated march 1, 20x2, we expressed an opinion that the 20x1 financial statements did not fairly present financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the united states of america because of two departures from such principles: (1) the company carried its property, plant, and equipment at appraisal values, and provided for depreciation on the basis of such values, and (2) the company did not provide for deferred income taxes with respect to differences between income for financial reporting purposes and taxable income.
Continuing auditor need not report on the prior-period financial statements if only summarized comparative information of the prior period(s) is presented.
The financial statements of abc company as of december 31, 20x1, were audited by other auditors whose report dated march 31, 20x2, expressed an unqualified opinion on those statements.
A change in accounting principle that has a material effect on the financial statements should be recognized in the auditor's report on the audited financial statements through the addition of an explanatory paragraph following the opinion paragraph.
An unqualified opinion states that the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the entity in conformity with generally accepted accounting principles.
Statement that the financial statements are the responsibility of the company's management4 and that the auditor's responsibility is to express an opinion on the financial statements based on his or her audit.
Report on the current-year financial statements with a disclaimer of opinion on the prior-year statements of income, retained earnings, and cash flows.
When the adjustment is made but disclosure of the event is not necessary, the auditors report should be dated as of the date of completion of fieldwork.
.64piecemeal opinions (expressions of opinion as to certain identified items in financial statements) should not be expressed when the auditor has disclaimed an opinion or has expressed an adverse opinion on the financial statements taken as a whole because piecemeal opinions tend to overshadow or contradict a disclaimer of opinion or an adverse opinion.
.72a predecessor auditor who has agreed to reissue his or her report may become aware of events or transactions occurring subsequent to the date of his or her previous report on the financial statements of a prior period that may affect his or her previous report (for example, the successor auditor might indicate in the response that certain matters have had a material effect on the prior-period financial statements reported on by the predecessor auditor).
Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
This context, practicable means that the information is reasonably obtainable from management's accounts and records and that providing the information in the report does not require the auditor to assume the position of a preparer of financial information.
.44the auditor is not required to prepare a basic financial statement (for example, a statement of cash flows for one or more periods) and include it in the report if the company's management declines to present the statement.
As described in note x, the company has changed its method of accounting for these items and restated its 20x1 financial statements to conform with accounting principles generally accepted in the united states of america.
Company did not make a count of its physical inventory in 20x2 or 20x1, stated in the accompanying financial statements at $_______ as of december 31, 20x2, and at $________ as of december 31, 20x1.
Requiring adjustment or disclosure the auditor may be aware of an event that occurred between the original report date and the reissuance date that affects the financial statements reported on.
.08the auditor's standard report identifies the financial statements audited in an opening (introductory) paragraph, describes the nature of an audit in a scope paragraph, and expresses the auditor's opinion in a separate opinion paragraph.
Addition, the auditor may add an explanatory paragraph to emphasize a matter regarding the financial statements (paragraph .
Information required by the financial accounting standards board (fasb), the governmental accounting standards board (gasb), or the federal accounting standards advisory board (fasab) has been omitted, the presentation of such information departs materially from fasb, gasb, or fasab guidelines, the auditor is unable to complete prescribed procedures with respect to such information, or the auditor is unable to remove substantial doubts about whether the supplementary information conforms to fasb, gasb, or fasab guidelines.
.74if the financial statements of a prior period have been audited by a predecessor auditor whose report is not presented, the successor auditor should indicate in the introductory paragraph of his or her report (a) that the financial statements of the prior period were audited by another auditor,29 (b) the date of his or her report, (c) the type of report issued by the predecessor auditor, and (d) if the report was other than a standard report, the substantive reasons therefor.
, the date of completion of the fieldwork is the date on which the auditor in charge of the engagement and the clients chief financial officer agree on the form and content of the financial statements.
.02this section does not apply to unaudited financial statements as described in as 3320, association with financial statements, nor does it apply to reports on incomplete financial information or other special presentations as described in as 3305, special reports.
You for this information, i couldnt quite figure out why an auditor would reissue a statement without re-examining financials.
Consequently, when reissuing the report on prior-period financial statements, a predecessor auditor should use the date of his or her previous report to avoid any implication that he or she has examined any records, transactions, or events after that date.