SA 510 Auditing Standards on Initial Audit Engagement Opening Balance
1. Purpose: The purpose is to establish standards regarding audit of opening balances in case of initial engagements, i.e., when the financial statements are audited for the first time or when the financial statements for the preceding period were audited by another auditor.
2. Audit Procedures:
a. A/c Policies being consistently followed
b. Correct balances of various a/c’s have been correctly b/f
c. Nature of Op. Bal. & risk of their misstatement in the current period
d. The Op. Bal. do not contain misstatements that materially affect the financial statements of the current period.
3. For other assets and liabilities, such as fixed assets, investments and longterm debt:
a. The auditor will ordinarily examine the records underlying the opening balances Or
b. The auditor may obtain confirmation of opening balances from third parties.
4. Misstatements & Not adjusted: If the opening balances contain misstatements which materially affect the financial statements for the current period the auditor should express a qualified opinion or an adverse opinion, as appropriate.
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