Wiley Practitioner's Guide to GAAS 2020

33AU-C 708 Consistency of Financial Statements

Scope

Definition of Term

Objectives of AU-C Section 708

Requirements

Consistency Implication of Auditor’s Standard Report

Periods to Which Consistency Standard Relates

Changes Affecting Consistency

Changes Not Affecting Consistency

First-Year Audits

SCOPE

AU-C 708 offers the auditor guidance on how to evaluate and address in the report inconsistencies of financial statements between periods. The Section also addresses changes to previously issued statements. (AU-C 708.01)

DEFINITION OF TERM

Source: AU-C 708.04. For the definition related to this standard, see Appendix A, “Definitions of Terms”: Current period.

OBJECTIVES OF AU-C SECTION 708

The objectives of the auditor are to

1. evaluate the consistency of the financial statements for the periods presented; and
2. communicate appropriately in the auditor’s report when the comparability of financial statements between periods has been materially affected by a change in accounting principle or by adjustments to correct a material misstatement in previously issued financial statements.

(AU-C Section 708.03)

REQUIREMENTS

Consistency Implication of Auditor’s Standard Report

According to AU-C 708.05, the auditor must be satisfied that the comparability of financial statements between periods has not been materially affected by adjustments to correct a material misstatement in previously issued financial statements or by changes in accounting principles and that such principles ...