3 Planning preliminary considerations

Previous period’s financial statements not audited When the previous period’s financial statements have not been audited, for example an entity had taken advantage of any audit exemption in the previous year, there needs to be disclosure in the audit report (in an “Other Matter” paragraph) and financial statements that the comparatives are unaudited. This does not relieve us of our responsibility to obtain sufficient appropriate audit evidence that opening balances do not contain material misstatements that affect the current period’s financial statements. In some instances where we are unable to gain evidence (e.g. substantive testing including analytical procedures) regarding opening balances (e.g. inventory) it might be necessary to qualify our opinion on the results for the year (i.e. the income statement), but not the state of affairs (i.e. the balance sheet), due to a limitation of scope.
710.14
Generally, where we prepared the previous and current period's financial statements we would expect to have sufficient appropriate evidence. If we did not prepare the previous period's financial statements it becomes more difficult to gain the evidence we require.
Previous period’s financial statements qualified If there has been a qualification in the report for the preceding period, we need to ensure the matter leading to the qualifications has been resolved and properly dealt with in this year's financial statements. If we cannot satisfy ourselves regarding the correctness of any of the opening figures (e.g. inventory) we may need to qualify our opinion on the current year's income statement. Also, we may consider it necessary to qualify our opinion regarding compliance with the legislative requirements with reference to the comparative figures.