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AU-C 510 Opening Balances—Initial Audit Engagements, Including Reaudit Engagements

AU-C ORIGINAL PRONOUNCEMENT

Original Pronouncement

Statement on Auditing Standards (SAS) 122.

APPLICABILITY

This section applies when a change of auditors has occurred or is in process for an audit or reaudit of financial statements in accordance with generally accepted auditing standards (GAAS). This section applies to both predecessor and successor auditors. It also provides guidance when a successor becomes aware of possible misstatements in financial statements reported on by a predecessor auditor.

The section applies whenever an auditor is considering accepting an engagement to audit or reaudit financial statements, and after such auditor has been appointed to perform such an engagement. The section does not apply to the predecessor auditor if the most recent audited financial statements are more than one year prior to the beginning of the earliest period to be audited by the successor auditor. (AU-C 510.02)

The section also applies to engagements when a successor auditor is replaced before completing an audit engagement and issuing a report. In such situations, there are two predecessor auditors: the auditor who reported on the most recent audited financial statements and the auditor who was engaged to perform but did not complete the engagement.

DEFINITIONS OF TERMS

Source: AU-C Section 510.05

Initial audit engagement. An engagement in which either (1) the financial statements ...