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Chapter 123 4

Initial engagements

ISA 510 Initial Engagements – Opening Balances provides the following guidance.

5.1 Auditor objectives

The auditor must ensure that:

 opening balances do not contain material misstatements.

 prior period closing balances have been correctly brought forward or, where
appropriate, restated.

 appropriate accounting policies have been consistently applied, or changes
adequately disclosed.

5.2 Audit procedures

 Consulting the client’s management.

 Reviewing records and accounting and control procedures in the preceding
period.

 Consulting with the previous auditor and reviewing (with their permission) their
working papers and relevant management letters.

 Substantive testing of any opening balances where the above procedures are
unsatisfactory.

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