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NEW QUESTION: 1
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:
A. Express an opinion only on the current year's statements and make no reference to the prior year's
statements.
B. Request the client to reissue the predecessor's report on the prior year's statements.
C. Indicate the substantive reasons for the qualification in the predecessor auditor's opinion.
D. Issue an updated comparative audit report indicating the division of responsibility.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
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.
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