[goforCPA]

Hi all,

Would you guys help in clarifying my understanding regarding the reporting for comparative financials. Basically there are 2 scenarios and they are as follows:

1) Reporting with different opinions

In this case there are no circumstances that require the auditor to believe that the last year’s report needs to be updated or the financial statements for last year are not being restated. So, when you are going from bad reporting Year 1 (i.e. adverse opinion) to good reporting Year 2 (i.e. unqualified opinion) then there is a mention of the reason for the adverse opinion expressed in Year 1 in an explanatory paragraph in the current year’s (Year 2) report (the unqualified opinion). If the opinions are reversed (i.e. unqualified Year 1 and qualified Year 2) then there is no mention other than a regular report for comparative financials. What if you go from qualified Year 1 to adverse Year 2 do you have to make changes to the adverse report for comparative presentation purposes?

2) Updating/Changing prior opinions

In this case either the auditor realized there was a mistake on the prior opinion, or the client corrected the issues and would like to restate last years financials as part of the comparative financial statements. In this instance the auditor would insert a middle paragraph (before the opinion) that will include: a) the date of the previous opinion, b) prevous opinion issued, c) reason for the prior opinion, d) changes that have occurred, e) statement that the “opinion…is different”.

Please let me know if my above understanding is correct and please let me know the response the questions embedded in 1) above.

As always, greately appreciate your feedback…

October 2011-May 2013. Did not loose any credit!!
AUD - 73, 79
REG - 86
FAR - 72, 83
BEC - 80, last one, DONE!!