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Hi Sir,
If you are auditing financial statements and you notice an error in prior audit financial statements, how should you account for these errors in accounting?
Moreover, what is a going concern close call, and where should it be included in the Audit report, under KAM or uncertainty re going concern?
The auditor CANNOT account for anything – only management can account for anything as the preparation and presentation of the financial statements is management’s responsibility.
A prior period error should be accounted for in accordance with IAS 8. If management did not account for it in accordance with IAS 8, the auditor would consider the implications for the audit opinion.
See Chapter 24 of the notes regarding KAM and going concern.
Note that KAMs are required only for listed entities. So one way of looking at this issue is that it would not make sense for a going concern matter to be reported in KAM simply because the entity is listed – for consistency, it should be reported in the going concern para regardless of the entity.
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