Annual Audit Manual
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8021 Introduction
Oct-2012
In This Section
Overview
This topic explains:
- The CAS objective related to procedures regarding comparative information;
- How the nature of comparative information for inclusion in financial statements is determined;
- Implications for the audit report of the two different approaches to reporting comparatives.
CAS Objective
The objectives of the auditor are (CAS 710.5):
(a) To 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; and
(b) To report in accordance with the auditor's reporting responsibilities.
CAS Guidance
The nature of the comparative information that is presented in an entity's financial statements depends on the requirements of the applicable financial reporting framework. There are two different broad approaches to the auditor's reporting responsibilities in respect of such comparative information: corresponding figures and comparative financial statements. The approach to be adopted is often specified by law or regulation but may also be specified in the terms of the engagement (CAS 710.2).
The essential audit reporting differences between the approaches are (CAS 710.3):
(a) For corresponding figures, the auditor's opinion on the financial statements refers to the current period only; whereas
(b) For comparative financial statements, the auditor's opinion refers to each period for which financial statements are presented.
OAG Guidance
It is our preferred approach to report using the corresponding figures approach unless the comparative financial statements approach is required by law, regulation or market practice.