When a company is audited for the first time or changes auditor, the auditor obtains evidence that opening balances are free from material misstatement and that accounting policies have been applied consistently. If sufficient evidence cannot be obtained, the opinion may be affected.
Source: BDS 510
Related terms
Interim auditAudit work carried out before year end, usually in the last quarter of the period, covering risk assessment, tests of controls and some tests of details.Auditor rotationThe requirement, designed to protect auditor independence, for a company to be audited by another auditor or audit firm after a certain period.Other matter paragraphA paragraph in the auditor's report referring to a matter not presented in the financial statements that is relevant to understanding the audit, the auditor's responsibilities or the report.Adverse opinionThe opinion in which the auditor states that the financial statements are not presented fairly, where misstatements are both material and pervasive.Agreed-upon proceduresAn engagement in which the practitioner performs procedures agreed with the entity and, where relevant, a third party, and reports only the findings without providing assurance.Analytical proceduresThe evaluation of financial information through analysis of plausible relationships among financial and non-financial data.
Last updated: October 31, 2026 · This definition is for general information only.