Comparative financial statements include the financial statements of the prior y

Question

Comparative financial statements include the financial statements of the prior year that were audited by a predecessor auditor whose report is not presented. If the predecessor's report was qualified, the successor should: (Points : 3)      

Indicate the substantive reasons for the qualification in the predecessor auditor's opinion.
       Request the client to reissue the predecessor's report on the prior year's statements.
       Issue an updated comparative audit report indicating the division of responsibility.
       Express an opinion only on the current year's statements and make no reference to the prior year's statements.

Explanation / Answer

Ans a  Indicate the substantive reasons for the qualification in the predecessor auditor's opinion.

So the successor auditor must indicate in an other-matter paragraph of the audit report

1) Stating that the prior period financial statement were audited by predecessor auditor

2) The nature of other matter and emphasis of matter included in previous auditor report

3) What type of opinion was expressed ny auditor and if there was any modification than the reson behind it .

4) date of audit report.

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