Comparative financial statements include the financial statements of the prior year that were audited by a predecessor auditor whose report is not presented. If the predecessor's report was qualified, the successor should:

Question

Quizplus · Accepted Answer

Choice "A" is correct. If 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 the audit report (1) that the financial statements of the prior period were audited by another auditor, (2) the type of report issued, and (3) if the report was other than standard, the substantive reasons therefor. Choice "B" is incorrect. The predecessor auditor, not the client, may reissue the previous year's audit report. Choice "C" is incorrect. An audit report would indicate a division of responsibility when the principal auditor's opinion is based in part on the report of another auditor. Choice "D" is incorrect. If the prior year's financial statements are issued, the previous year's audit opinion must also be disclosed.

Comparative Financial Statements Include the Financial Statements of the Prior