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Comparative figures in the Audited Accounts?

Comparative figures in the Audited Accounts are compulsory to present? What are the Exceptions?

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I am representing an audit firm in UAE. One of our GCC client had dummy accounts (for tax department purpose) as issued last year by previous auditors. Now its first year with us and we have to present comparative opening balances as per original books of account maintained by the client because the client has no trial balance which will match with amounts as in those last year's dummy audited financials. My Questions are;

1) Can we skip presenting the comparative figures in Balance Sheet and P&L and only present current year audited by us?

2) If we must have to present comparative figures as per ISA 710, then which trial balance to use? As company have no trial balance matching with opening balances?

3) Can we take a letter from Client's management that the comparative figures are provided by the management and were unaudited and then can use original trial balance maintained by client for opening and current year figures?


Please help; if somebody could then that will be highly appreciable!

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By jacksonjoh
Sep 22nd 2017 18:30 EDT

Paragraph 2 of ISA 710 states " The nature of the comparative information that is presented in an entity's financial statements depends on the requirements of the applicable financial reporting framework."

So it's important to know what the framework and purpose for for the financials. (e.g. US GAAP, IFRS as issued by the IASB, or some other local GAAP). Once we know that, we have to look to those standards for any comparative requirement. Are these financials subject to any other regulatory requirements that might have rules on comparative requirements?

1.) You can skip comparative presentation but have to make sure that this will be in compliance with the requirements as stated above. If prior year wasn't audited this is the cleanest and most cost effective option.

2.) ISA 710 doesn't require you to present comparative F/S. Rather, it requires the auditor to ensure that presentation is in accordance with the framework. The Company should have a prior year trial balance that reconciles to prior year presentation of financial statements. If there is no data to back up the opening balances, it is hard for you to issue an opinion on any comparative amounts.

3.) Not exactly clear on your question; comparative amounts are always provided by management and a letter doesn't add much value. If you present comparative and mark the prior year balances and amounts as "audited", again, you'd have to ensure that this presentation is acceptable under the framework you are reporting under and any other regulatory requirements. This is usually not acceptable and in my cases we have gotten the consent/opinion from the prior year auditors on the comparative numbers, or, if no audit was done on the prior year, we needed to do the audit in order to opine on both years.

I hope this is helpful!

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