Regarding prior-period financial statements that were audited by another auditor, which statement is true?

• A. The extent of the audit procedures performed on the corresponding figures is significantly less than scope of the audit for the current figures.
• B. When comparatives are presented as corresponding figures, the auditor must explicitly refer to the predecessor in the introductory paragraph.
• C. The successor auditor must insist that the prior-period audit be performed by the successor.
• D. If comparatives are audited, the auditor is not required to refer to the predecessor.

Answer: (A)

When financial statements include prior-period figures that were audited by another auditor, the current auditor does not redo the entire prior-year audit. Instead, the auditor relies on the predecessor’s work for those figures and performs limited procedures to assess the opening balances and the comparatives. This means the work done on the prior-period figures is significantly less extensive than the work done for the current-year figures, because the prior-period assurance comes from the previous audit, while the current audit focuses on the new period and any necessary adjustments.

The other statements don’t fit because: it is common to refer to the predecessor auditor in the introductory paragraph when comparatives are presented and were audited; the successor auditor is not required to compel the prior-period audit to be performed again by the successor; and while you may reference the predecessor, you do not rely on a fresh audit by them in the current engagement.