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How to test opening balances?
Just looking for few procedures to be performed, if possible.Many thanks.
Check to last year’s published financial statements
What more do you want?
Maybe a bit more is necessary if it’s our first year ….. but that’s in the lectures / course notes
Did you want more?
Yes, it is first year audit, that’s why I need to test opening balances. I will check the course notes, and may come back here if I need more details
Thanks 🙂
Compare with previous auditors’ working papers / lead schedules if they are provided
Compare with client’s own records / general ledger
Compare with copy of financial statements filed with the government / tax office
You should have received a closing trial balance from the previous auditors – compare the opening figures to that closing trial balance from last year
Some of this year’s work will go towards establishing reasonableness of last year’s closing figures (January / February receipts from receivables, and payments to suppliers for the same period, sales of goods in January to confirm inventory is sold for greater than cost … )
As a VERY LAST resort, you may need to re-perform some audit work from last year to be able to get happy about the brought forward amounts
Better?
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