Comparatives

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Comparative Information Audit Case Example: ABC Manufacturing Company

Context

ABC Manufacturing Company presents financial statements that include comparative information from the previous period to allow users to evaluate the company’s financial performance and position over time. Ensuring that this comparative information is correctly presented and accurately reflects any adjustments or policy changes is crucial for stakeholder confidence and compliance with financial reporting standards.

Audit Objective

To obtain reasonable assurance that comparative information included in ABC Manufacturing Company’s financial statements is accurately presented, consistent with the current period’s financial statements and accounting policies, and properly disclosed in accordance with the applicable financial reporting framework.

Types of Audit Evidence and Documentation for Comparative Information Assertions

1. Accuracy

• Case: Verify that the comparative information is accurately carried forward from the prior period’s audited financial statements or adjusted as necessary for any restatements.

• Documentation: Document the reconciliation of comparative figures to the prior period’s financial statements and any adjustments made, noting the nature and reason for adjustments.

2. Consistency

• Case: Assess whether accounting policies have been consistently applied from the prior period to the current period, or if any changes in accounting policies have been appropriately reflected in the comparative information.

• Documentation: Summarize the review of accounting policy consistency, including any changes in policies, the reasons for such changes, and how these changes have been applied retrospectively to comparative figures, if applicable.

3. Completeness

• Case: Ensure that all required comparative information is presented for all line items and disclosures in the financial statements.

• Documentation: Outline procedures for assessing the completeness of comparative information, such as checking compliance with financial reporting standards that require the presentation of comparative figures for all significant items.