Question
When financial statements of a prior period are presented on a comparative basis with financial statements of the current period, the continuing auditor is responsible for
A. Expressing dual dated opinions.
B. Updating the report on the previous financial statements only if there has not been a change in the opinion.
C. Updating the report on the previous financial statements only if the previous report was qualified and the reasons for the qualification no longer exists.
D. Updating the report on the previous financial statements regardless of the opinion previously issued.
I picked C. But the Answer is D.
Explanation
The correct answer is D. When an auditor becomes aware of circumstances or events during his current examination that may cause him to express a different opinion than the one he previously expressed on the prior period's statements, he must update his report of the prior period regardless of what opinion was given. Per AU 700.A51: “ When reporting on the prior period financial statements in connection with th e current period’s audit, the opinion expressed on the prior period financial statements may be different from the opinion previously expressed if the auditor becomes aware of circumstances or events that materially affect the financial statements of a prior period during the course of the audit of the current period.
Answer A is incorrect because expressing dual dated opinions is when a subsequent event extends the time period through which the auditor takes responsibility.
Answer B is incorrect because the auditor’s report from the previous period needs to be updated regardless of the opinion issued.
Answer C is incorrect because the auditor’s report from the previous period needs to be updated regardless of the opinion issued.
.