Document ID: chunk:federal_register_of_legislation:F2023C00370:reg:9:p2
Version: federal_register_of_legislation:F2023C00370
Segment Type: reg
Provision Reference: reg 9 (pt 2/13)
Character Range: 8728–12194

beginning of the period, such as contingencies and commitments.  When the financial report includes comparative financial information, the requirements and guidance in ASA 710[1] also apply.  ASA 300[2] includes additional requirements and guidance regarding activities prior to starting an initial audit.

Effective Date

2.                   [Deleted by the AUASB.  Refer Aus 0.3]

Objective

3.                   In conducting an initial audit engagement, the objective of the auditor is to obtain sufficient appropriate audit evidence about whether:

(a)                Opening balances contain misstatements that materially affect the current period's financial report; and

(b)                Appropriate accounting policies reflected in the opening balances have been consistently applied in the current period's financial report, or changes thereto are appropriately accounted for and adequately presented and disclosed in accordance with the applicable financial reporting framework.

Definitions

4.                   For the purposes of this Auditing Standard, the following terms have the meanings attributed below:

(a)                Initial audit engagement means an engagement in which either:

         (i)                 The financial report for the prior period was not audited; or

         (ii)               The financial report for the prior period was audited by a predecessor auditor.

(b)                Opening balances means those account balances that exist at the beginning of the period.  Opening balances are based upon the closing balances of the prior period and reflect the effects of transactions and events of prior periods and accounting policies applied in the prior period.  Opening balances also include matters requiring disclosure that existed at the beginning of the period, such as contingencies and commitments.

(c)                Predecessor auditor means the auditor from a different audit firm, who audited the financial report of an entity in the prior period and who has been replaced by the current auditor.

Requirements

Audit Procedures

Opening Balances

5.                   The auditor shall read the most recent financial report, if any, and the predecessor auditor's report thereon, if any, for information relevant to opening balances, including disclosures.

6.                   The auditor shall obtain sufficient appropriate audit evidence about whether the opening balances contain misstatements that materially affect the current period's financial report by: (Ref: Para. A1‑A2)

(a)                Determining whether the prior period's closing balances have been correctly brought forward to the current period or, when appropriate, have been restated;

(b)                Determining whether the opening balances reflect the application of appropriate accounting policies; and

(c)                Performing one or more of the following: (Ref: Para. A3‑A7)

            (i)            Where the prior year financial report was audited, reviewing the predecessor auditor's working papers to obtain evidence regarding the opening balances;

            (ii)          Evaluating whether audit procedures performed in the current period provide evidence relevant to the opening balances; or

            (iii)        Performing specific audit procedures to obtain evidence regarding the opening balances.

7.                   If the auditor obtains audit evidence that the opening balances contain