ISA 710 — Comparative Information: Corresponding Figures and Comparative Financial Statements: Complete Guide

Key Takeaways

ISA 710 deals with the auditor's responsibilities regarding comparative information — the amounts and disclosures from prior periods included in the current financial statements.
Two fundamentally different approaches exist: corresponding figures (auditor opines only on the current period) and comparative financial statements (auditor opines on each period).
Most IFRS-reporting jurisdictions use corresponding figures. The auditor must still evaluate whether comparatives are properly presented and reflect consistent accounting policies.
When a prior-period modification is unresolved, the auditor must modify the current period opinion on the corresponding figures.
When a material misstatement is discovered in prior-period figures, the auditor must evaluate whether comparatives have been properly restated and disclosed.
When a predecessor auditor audited the prior period, specific reporting requirements apply — including an Other Matter paragraph.
When the prior period was not audited, the auditor states this in an Other Matter paragraph but must still obtain sufficient evidence on opening balances (ISA 510).

What is ISA 710?

ISA 710, titled "Comparative Information—Corresponding Figures and Comparative Financial Statements," addresses a practical reality of financial reporting: financial statements almost always include prior-period information for comparison. The auditor's responsibilities regarding that prior-period information depend on the approach prescribed by the applicable framework.

The standard is particularly important in situations involving changes of auditor, restatements, prior-period errors, and initial audits — all of which create complications around how comparative information is handled in the report.

Two Approaches to Comparative Information

Corresponding figures

Definition: Comparative information where amounts and disclosures for the prior period are included as an integral part of the current period's financial statements — intended to be read in relation to the current period.

Auditor's opinion: Refers only to the current period. The auditor does not express a separate opinion on the corresponding figures.

Most common under: IFRS (IAS 1), Dutch GAAP, German HGB, and most European frameworks.

Comparative financial statements

Definition: Comparative information where amounts and disclosures for the prior period are presented as separate financial statements for each period — each standing on its own.

Auditor's opinion: Refers to each period for which financial statements are presented.

Most common under: US GAAP and Canadian GAAP.

Audit Procedures on Comparative Information

Regardless of the approach, the auditor must evaluate whether:

The comparative information agrees with the amounts and disclosures in the prior period (or, if restated, the restated amounts are appropriate).
The accounting policies reflected in the comparative information are consistent with those applied in the current period, or any changes have been properly accounted for and disclosed.
The comparative information is appropriately classified — matching the current period's presentation.

These procedures link to ISA 510 (Initial Audit Engagements — Opening Balances) when the auditor did not audit the prior period.

Impact of Prior-Period Issues

Unresolved prior-period modification

If the auditor's report on the prior period included a qualified, adverse, or disclaimer of opinion, and the matter remains unresolved:

Corresponding figures: The auditor must modify the opinion on the current period financial statements. The modification relates to the corresponding figures — for example, a qualified opinion stating "except for the possible effects of the matter described... on the corresponding figures."

Comparative financial statements: The auditor's opinion on the prior period would reflect the unresolved modification. A new opinion on the current period may be unmodified (if the current period itself is clean) while the prior-period opinion remains modified.

Prior-period misstatement discovered during current audit

If the auditor discovers a material misstatement in the prior-period figures on which an unmodified opinion was previously expressed:

If the corresponding figures have been properly restated and appropriate disclosures made → the auditor may include an EOM paragraph describing the circumstances.
If the corresponding figures have not been properly restated or disclosures are inadequate → the auditor must express a qualified or adverse opinion on the current period financial statements, modified in respect of the corresponding figures.

The "prior-period ghost" effect

A common source of confusion: with corresponding figures, a prior-period problem can haunt the current period's audit report even when the current period is entirely clean. If the prior-period opinion was qualified for, say, an inability to observe inventory, and the matter is unresolved, the current period's report must be qualified in respect of the corresponding figures — even though the current period's inventory is fine. This "ghost" effect persists until the matter is resolved through proper restatement or until the affected period is no longer presented as corresponding figures.

Predecessor Auditor Situations

Corresponding figures — predecessor audited prior period

If the prior period was audited by a predecessor auditor, the current auditor may (where permitted by law or regulation) include an Other Matter paragraph stating:

That the prior period's financial statements were audited by the predecessor auditor.
The type of opinion expressed by the predecessor (and reasons for any modification).
The date of the predecessor's report.

The current auditor does not express an opinion on the corresponding figures — but must still obtain sufficient evidence on opening balances under ISA 510.

Comparative financial statements — predecessor audited prior period

Two options exist: the predecessor auditor's report may be reissued alongside the current auditor's report, or the current auditor may audit the prior-period financial statements and issue a new opinion. If the current auditor's opinion on the prior period differs from the predecessor's previously expressed opinion, the auditor must disclose the reasons in an Other Matter paragraph.

Prior period not audited

If the prior period was not audited, the auditor includes an Other Matter paragraph stating that the corresponding figures are unaudited. This does not relieve the auditor from obtaining sufficient evidence on opening balances (ISA 510) — if such evidence cannot be obtained, a modified opinion on the current period may be necessary.

ISA 710 in Your Jurisdiction

Netherlands. COS 710 follows ISA 710. Dutch statutory financial statements under Title 9, Book 2 BW use the corresponding figures approach. Changes of auditor are relatively common in the Netherlands (particularly since mandatory audit firm rotation for OOBs), making the predecessor auditor provisions practically significant.

Germany. IDW PS 710 adapts ISA 710. German financial statements under HGB present a comparative balance sheet (Vorjahres-Bilanz) but not always a comparative income statement in the statutory accounts. The corresponding figures approach applies.

United Kingdom. ISA (UK) 710 is substantively aligned with ISA 710. UK practice primarily uses corresponding figures under IFRS and UK GAAP (FRS 102). The FRC expects clear disclosure when there has been a change of auditor.

France. NEP 710 implements ISA 710. French statutory accounts under the PCG use corresponding figures. The French system of co-commissariat (joint audit) creates unique dynamics — when one commissaire aux comptes changes but the other continues, the transition may be smoother than a full auditor change.

Frequently Asked Questions

Does the auditor need to re-audit the prior period?

No. For corresponding figures, the auditor does not perform a full re-audit of the prior period. The auditor evaluates whether the comparatives are properly presented, agree to prior amounts, and reflect consistent policies. However, the auditor must obtain sufficient evidence on opening balances (ISA 510), which may require specific procedures.

Can KAM relate to comparative information?

ISA 701 explicitly states that KAM are limited to matters of most significance in the audit of the current period — even when comparative financial statements are presented. However, a matter affecting the comparatives could be a KAM for the current period if it required significant auditor attention.

What if the predecessor auditor refuses to cooperate?

If the predecessor is unable or unwilling to reissue their report, provide documentation, or cooperate, the current auditor must still obtain sufficient evidence on opening balances. If this cannot be achieved, a modified opinion may be necessary. The current auditor cannot simply rely on the predecessor's opinion — they must form their own conclusion.

Does a restatement of comparatives always require an EOM paragraph?

Not automatically, but it is common practice. If the prior period has been restated and appropriate disclosures are made, the auditor may include an EOM paragraph drawing attention to the restatement and the related note disclosure. This is a matter of auditor judgment.

ISA 710 — Comparative Information: Complete Guide