3 Planning preliminary considerations

New client In the situation of being incoming auditors we do not have the responsibility to re-audit the financial statements of the preceding period. The sufficiency and appropriateness of the audit evidence regarding opening balances required by us as incoming auditors depends on such matters as:
510.A3
the accounting policies followed by the entity;
whether the preceding period's financial statements were audited and, if so, whether the auditors' report was qualified;
the nature of the opening balances, including the risk of their misstatement; and
the materiality of the opening balances relative to the current period's financial statements.
As incoming auditors normally the audit work on the current period provides evidence regarding opening balances. Other procedures which incoming auditors might perform include the following:
consultations with management and review of records, working papers and accounting and control procedures for the preceding period; and
substantive testing of any opening balances in respect of which the results of other procedures are considered unsatisfactory. Particular emphasis may need to be given to such testing where the previous financial statements were unaudited, for example if an entity has taken advantage in the previous year of any exemptions from audit. If in these circumstances it is not possible for us to obtain sufficient appropriate audit evidence, we consider the implications for our report.
Where the previous period's financial statements were audited by another firm, we assume audit responsibility for the corresponding figures in the context of the financial statements as a whole. We read the previous year's financial statements and, using the knowledge gained during the current audit, consider whether they have been properly reflected as comparatives in the current period's financial statements.
Requesting information from a predecessor We may, once we have been formally appointed as auditor to a client, be able request access to all relevant information our predecessor holds in respect of their audit work, including access to their audit working papers, and permanent or systems files.	510.A4
Normally this information will be in respect of any audit report relating to the period falling between the beginning of the last financial statements on which our predecessor reported and the date of cessation of his audit appointment.

Our decision whether or not to request relevant information from the predecessor auditor is a matter of judgement, dependent on the particular circumstances of the client, as will be the extent of the information requested. Our decision will however be influenced in particular by:
ISA 510 (opening balances); ISA 710 (comparatives); and ISA 300 (planning)
which make reference to initial engagements and underlie the work that we need to complete to develop our audit plan and programs.
As part of our planning procedures we should consider what information we need and make our request for information as specific as possible, to avoid incurring excessive costs and use of resources. Subject to local statutory requrements or predecessor should hopefully be prepared to assist us by providing oral or written explanations, on a timely basis, to assist our understanding of the audit working papers.
Working papers in this context include papers prepared to: assist in the planning and performance of the audit; assist in the supervision and review of the audit work; and record the audit evidence resulting from the audit work performed to support the auditor’s opinion.