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510 (2) (images (4) REQUIREMENT (Read the most recent financial statement…
DEFINITION
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REQUIREMENT
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Determine weather the prior period’s closing balances have been correctly brought forward to the current period.
Determine where restatement in opening balance is required , they are restated.
Determining whether the opening balances reflect the application of appropriate accounting policies.
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Evaluating whether audit procedures performed in the current period provide evidence relevant to the opening balances
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OBJECTIVE
Objective of the auditor with respect to opening balances is to obtain sufficient appropriate audit evidence about whether
Opening balances contain misstatements that materially affect the current period’s financial statements
Appropriate accounting policies reflected in the opening balances have been consistently applied in the current period’s financial statements, or changes thereto are appropriately accounted for and adequately presented and disclosed in accordance with the applicable financial reporting framework.
SCOPE
PSA 510 deals with the auditor’s responsibilities relating to opening balances in an initial audit engagement.
In addition to financial statement amounts, opening balances include matters requiring disclosure that existed at the beginning of the period, such as contingencies and commitments.
When the financial statements include comparative financial information, the requirements and guidance in PSA 7101 also apply.
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