When a predecessor auditor has examined the prior years' financial statements presented in comparative format, the current auditors' report should
A)make no reference to the predecessor auditors' report.
B)reference the predecessor auditors' report in the Opinion Section, Basis for Opinion Section, and Auditor's Responsibilities for the Audit of the Financial Statements Section.
C)reference the predecessor auditors' report in an other-matter paragraph.
D)disclaim an opinion on the prior years' financial statements.

Question

Quizplus · Accepted Answer

The current auditor should reference the predecessor auditor's report in an other-matter paragraph. This paragraph should describe the nature of the engagement performed by the predecessor auditor, the date of the predecessor auditor's report, and the type of opinion expressed. This is required by auditing standards and helps provide users of the financial statements with a complete understanding of the audit history. Option A is incorrect because the predecessor auditor's report should be referenced. Option B is too broad as referencing the predecessor auditor's report in all sections of the auditor's report is not necessary. Option D is also incorrect because the current auditor can provide an opinion on the prior years' financial statements if they have been examined by the predecessor auditor.

When a Predecessor Auditor Has Examined the Prior Years' Financial