Wiley Practitioner's Guide to GAAS 2018, 2nd Edition

AU-C 708 Consistency of Financial Statements

AU-C Original Pronouncement

Source

Statement on Auditing Standards (SAS) 122.

AU-C Definition of Term

Source: AU-C 708.04

1. Current period. The most recent period upon which the auditor is reporting.

Objectives of AU-C Section 708

AU-C Section 708.03 states that:

…the objectives of the auditor are to

1. evaluate the consistency of the financial statements for the periods presented and
2. communicate appropriately in the auditor's report when the comparability of financial statements between periods has been materially affected by a change in accounting principle or by adjustments to correct a material misstatement in previously issued financial statements.

Requirements

Consistency Implication of Auditor's Standard Report

According to AU-C 708.05, the auditor must be satisfied that the comparability of financial statements between periods has not been materially affected by adjustments to correct a material misstatement in previously issued financial statements or by changes in accounting principles and that such principles have been consistently applied between or among periods because either (1) no change in accounting principles has occurred, or (2) there has been a change in accounting principles or in the method of their application, but the effect of the change on the comparability of the financial statements is not material. In these cases, the auditor would not refer to consistency in his or her report.

Periods to Which ...