Opening balance difference....what to do??

This query is : Open

Amit Kumar Khatri (Querist)
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14 June 2013 what should an auditor do if opening balance as per last year's audit report is not matching with the opening balance as per books of accounts (items like cash, bank, advances etc). Also the client is claiming that the balance in their books is correct.
I will appreciate an early response.

Thanks in advance

Guest

Guest (Expert)

14 June 2013 It is commonly witnessed during audits. You need to identify the entries with the help of accountant which are causing the difference.

Also, another thing to keep in mind is that we show previous years' audited figures in the balance sheet of the current year which cannot be changed, if we try to change it now then the previous years' balance sheet will not tally.

You should also produce previous years' working papers for ex. Trial Balance to the owners if at all they are claiming that the changed opening balances are correct.

Lets wait for an opinion from other experts.

Ganeshbabu K

Ganeshbabu K (Expert)
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14 June 2013 No..opening balance should be as per previous year audited balance sheet and certified tb of previous year..

this may because they might have passed some back dated voucher

ask them to adjust as per previous balances

Thanks & regards
Ganeshbabu k

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Amit Kumar Khatri

Amit Kumar Khatri (Querist)
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14 June 2013 Thanks for your suggestion dear experts, but the thing is like we dont have enough time to go through previous year documents because of huge audit assignment. All we did was checked the opening balance from cash book register and advance register but those opening were not matching with the balance as per audit report. When I ask the accountant they said our register is correct. We had no option left so we ask them to certify the opening difference and we verified the transactions during the year and the same difference was coming at the end.
Now I am confused !!! What to do now...need your expert advise dear experts.

Guest

Guest (Expert)

14 June 2013 In such a case your current year balance sheet is not going to tally. Ask the accountant to prepare a reconciliation statement and get it certified. If you think you can figure out the reason behind the difference then mark it as a suspense A/c then deal with it later on.

Ganeshbabu K

Ganeshbabu K (Expert)
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14 June 2013 you need to verify previous year cash transacations..

do reconciled between last year certified TB and current year opening TB..

Thanks & regards
Ganeshbabu

Amit Kumar Khatri

Amit Kumar Khatri (Querist)
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14 June 2013 Note : The books they are preparing is MANUAL and Financial Statement includes Receipts & Payments, Income & Expenditure and Balance Sheet

As I said earlier i have taken a certified copy of opening balance difference. And difference coming at the end of the year is same and shown as DIFFERENCE IN OPENING BALANCE.

I want to know can I report it that way in Audit Report i.e. DIFFERENCE IN OPENING BALANCE

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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14 June 2013 Reporting in the audit report is secondary. you cannot certify the financials which opening balances are not matching with previous year closing balances, ask client to correct the opening balances as per financials and any adjustment or rectification need to be passed can do in current year.

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