Objective
In conducting an initial audit, to obtain sufficient appropriate audit evidence about whether opening balances contain misstatements that materially affect the current period's financial statements.
Key requirements
- Read the most recent FS and the predecessor auditor's report
- Determine whether prior-period closing balances have been correctly brought forward
- Determine whether accounting policies are consistently applied
- For first-year audits: review the predecessor's working papers (with consent) where possible
- Where unable to obtain evidence — consider impact on auditor's report
Typical procedures
- Reconciliation of prior-year audited closing FS to current-year opening
- Communication with predecessor auditor
- Specific procedures on inventory and other balance-sheet items where carry-forward risk is high
Common pitfalls
- No formal communication with predecessor auditor
- Opening balance verification skipped on grounds that "the prior auditor signed off"
- No consideration of comparatives misstatement for SA 710 purposes
On CORAA
Opening balances verified against the prior year's signed audit report. Comparatives automatically flagged if reclassification or restatement is detected.
Open the matching module →SA 510 in practice
SA 510 sits in the Audit Evidence phase of the audit. The Standards on Auditing are issued by the ICAI Auditing and Assurance Standards Board (AASB) and deemed to be prescribed by the Central Government under Section 143(10) of the Companies Act 2013. Compliance with SAs is mandatory for every audit conducted by a Chartered Accountant in India.
For authoritative text, refer to the ICAI AASB Compendium of Standards on Auditing at icai.org.
