FGH Ltd. has appointed you as the auditor for the financial year 2024-25. The company had a different auditor in the previous year. While planning…

The nature and extent of audit procedures necessary to obtain sufficient appropriate audit evidence regarding opening balances depend on such matters as: The accounting policies followed by the entity.The nature of the account balances, classes of transactions and disclosures and the risks of material misstatement in the current period’s financial statements.The significance of the opening balances relative to the current period’s financial statements.Whether the prior period’s financial statements were audited and, if so, whether the predecessor auditor’s opinion was modified. In the case of FGH Ltd., the presence of significant inventory and receivable opening balances along with the prior auditor’s qualification on receivables increases the risk associated with opening balances. Therefore, these factors will require you, as the new statutory auditor, to design more extensive and carefully focused audit procedures in accordance with SA 510 to obtain sufficient appropriate audit evidence before forming your opinion on the current year’s financial statements.