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In performing the audit of current period FS ,the incoming auditor may aware of a material mistatement that effects the prior period FS on which the precdecssor auditor had previously reported without modifaction then how to use KAM.
I’m not sure that that is a KAM
You’ll need to audit the restatement of last year’s figures to confirm the validity and correctness of the alteration but, other than that, what else is there?
If it IS a KAM, then mention it in the KAM section
Are you looking for more?
i dont think its KAM, its more likely Other Matter category ..minutes ago i read it in textbook, perhaps..you should lookup for the answer
Okay, should this be answered this way?
ISA710 requires in this situation, auditors shall discuss with TCWG and ask them to communicate with previous auditor about the material misstatement identified and request management to amend FS retrospectively as if the accounting error has never occurred.
If predecessor auditor agrees and issues a new auditor’s report, no impact on current year audit opinion but a possible EOM may be included. Otherwise, the current year audit opinon will be qualified on the basis of unresolved comparability matter.
It is unlikely to be a KAM as it may not be a matter that in the professional judgement of auditor that is most significant to the current year audit. If auditors conclude that it is not a KAM but it is a matter that is correctly presented in the FS and is considered to be fundamental to the understanding of the users, an EOM is included either before or after the KAM depending on the professional judgement.
Right?
“ISA710 requires in this situation, auditors shall discuss with TCWG and ask them to communicate with previous auditor about the material misstatement identified and request management to amend FS retrospectively as if the accounting error has never occurred.
If predecessor auditor agrees and issues a new auditor’s report, no impact on current year audit opinion but a possible EOM may be included. Otherwise, the current year audit opinon will be qualified on the basis of unresolved comparability matter.’
This is never going to happen! There is NO WAY that a predecessor auditor is going to withdraw an audit opinion on the set of financial statements for a client that is no longer theirs
It’s a very rare occurrence that any audit opinion is ever withdrawn, even for continuing clients
It’s not even a valid “What if …”
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