FAQs and Case Studies on SA 510, Initial Audit Engagement – Opening Balances

SA 510, Initial Audit Engagements- Opening Balances, deals with the auditor’s responsibilities relating to opening balances when conducting an initial audit engagement. In conducting an initial audit engagement, the objective of the auditor with respect to opening balances is to obtain sufficient appropriate audit evidence about whether:

(a) Opening balances contain misstatements that materially affect the current period’s financial statements; and

(b) Appropriate accounting policies reflected in the opening balances have been consistently applied in the current period’s financial statements, or changes thereto are properly accounted for and adequately presented and disclosed in accordance with the applicable financial reporting framework.

This story covers some untouched FAQs on SA 510 with the help of case studies to provide insights into the application of SA 510 in different scenarios including where a company’s financial statements for the prior period were not audited by a statutory auditor and a new auditor is appointed this year to carry out the audit of the financial statements for the first time. Does SA 510 apply to this audit engagement?

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