Wiley Practitioner's Guide to GAAS 2023, 2nd Edition

35AU-C 708 Consistency of Financial Statements

• Scope
• Definition of Term
• Objectives of AU-C 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 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 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 have been consistently ...