[Opinion] Detailed Audit Checklist on SA 510 Initial Audit Engagements | Opening Balances

CA Srinivasan Anand G. – [2024] 161 taxmann.com 435 (Article)

Standard on Auditing (SA) 510 deals with the auditor’s responsibilities relating to opening balances when conducting an initial audit engagement. In conducting an initial audit engagement, the objective of the auditor with respect to opening balances is to obtain sufficient appropriate audit evidence about whether:

(a) Opening balances contain misstatements that materially affect the current period’s financial statements; and

(b) Appropriate accounting policies reflected in the opening balances have been consistently applied in the current period’s financial statements, or changes thereto are properly accounted for and adequately presented and disclosed in accordance with the applicable financial reporting framework.

This checklist covers the following relevant to audit the Initial engagement:

I. Initial Engagements-Unaudited Opening Balances (Preceding Year’s FS not audited)

II. Initial Engagements-Previous year’s FS was audited by a predecessor auditor (opening balances audited but by predecessor auditor)

The article covers the following checklist points under Initial Engagements-Unaudited Opening Balances (Preceding Year’s FS not audited):

a. Is this a Type (a) initial audit engagement [Unaudited Opening Balances ( Preceding Year’s FS not audited)]

b. If yes, indicate the type:

• • • Tax audit under Section 44AB by the sole proprietorship/partnership firm/HUF carrying on business for the first time on carrying turnover threshold of Rs. 1 crore.
    • Statutory Audit of LLP for the first time since incorporation under Rule 24 of LLP Rules, 2009 on crossing the turnover threshold of Rs. 40 lakhs or on crossing the contributions threshold of Rs. 25 lakhs.
    • Tax audit of sole proprietorship/partnership firm/HUF carrying on business earlier getting accounts audited under section 44AB and then exempted from tax audit under Proviso to Section 44AB(1).
    • Tax audit of sole proprietorship/partnership firm/HUF opting out of presumptive taxation under Section 44AD.

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