Reference no: EM132677451

Question - The audit teams for AMA Auditors Group were requested by Hungry Lion to perform an audit. This is the first year that our firm has audited Hungry Lion. This gives rise to detection risk, as our firm does not have experience with the client, making it more difficult for us to detect material misstatements. However, this risk can be mitigated through rigorous audit planning, including obtaining a thorough understanding of the business of Hungry Lion.

In addition, there is a risk that opening balances and comparative information may not be correct. There is no reason for this to be a particularly high risk, as the previous auditor's opinions have been unmodified for the last four years. However, because the prior year figures were not audited by AMA Auditors Group, we should plan to audit the opening balances carefully, in accordance with ISA 510 Initial Audit Engagements - Opening Balances.

REQUIRED - Briefly discuss the procedures that an auditor must perform when auditing opening balances in terms of ISA 510 -Initial Audit Engagements -Opening Balance , in the instance where:

1. The prior period has not been audited

2. The previous period has been audited by other auditors