The auditors for PwS were requested by City Junction to perform an audit. This is the...

 

  

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The auditors for PwS were requested by City Junction to perform an audit. This is the first year that our firm has audited City Junction. This rises detection risk, as our firm does not have experience with the client, making it more difficult for us to detect material misstatements. However, this risk can be mitigated through rigorous audit planning, including obtaining a thorough understanding of the business enity. In addition, there is a risk that opening balances and comparative information may not be correct. There is no reason for this to be a particularly high risk, as the previous auditor's opinions have been unmodified for the last four years. However, because the prior year figures were not audited by PWS, we should plan to audit the opening balances carefully, in accordance with ISA 510 Initial Audit Engagements- Opening Balances. Required: Briefly discuss the procedures that an auditor must perform when auditing opening balances in terms of ISA 510-Initial Audit Engagements-Opening Balance ,in the instance where: 2.1 The prior period has not been audited (15 marks) 2.2 The previous period has been audited by other auditors. (10 marks) 2.3 Discuss the auditor's objective when auditing opening balances in terms of ISA 510 -Initial Audit Engagements -Opening Balance. (15 marks) 2.4 Explain the reporting consideration the auditor might put into consideration when he is not satisfied with the opening balances (10 marks) The auditors for PwS were requested by City Junction to perform an audit. This is the first year that our firm has audited City Junction. This rises detection risk, as our firm does not have experience with the client, making it more difficult for us to detect material misstatements. However, this risk can be mitigated through rigorous audit planning, including obtaining a thorough understanding of the business enity. In addition, there is a risk that opening balances and comparative information may not be correct. There is no reason for this to be a particularly high risk, as the previous auditor's opinions have been unmodified for the last four years. However, because the prior year figures were not audited by PWS, we should plan to audit the opening balances carefully, in accordance with ISA 510 Initial Audit Engagements- Opening Balances. Required: Briefly discuss the procedures that an auditor must perform when auditing opening balances in terms of ISA 510-Initial Audit Engagements-Opening Balance ,in the instance where: 2.1 The prior period has not been audited (15 marks) 2.2 The previous period has been audited by other auditors. (10 marks) 2.3 Discuss the auditor's objective when auditing opening balances in terms of ISA 510 -Initial Audit Engagements -Opening Balance. (15 marks) 2.4 Explain the reporting consideration the auditor might put into consideration when he is not satisfied with the opening balances (10 marks)

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21 As per ISA 510 Initial Audit engagement Opening balances the objective of the auditor while conducting the an initial audit engagement with respect to opening balance is to obtain sufficient approp... View the full answer