What is comparative information?
ISA 710.3–5 define the two approaches. Under the corresponding figures approach, the prior period amounts appear as part of the current year financial statements. The auditor's opinion covers only the current period, but the auditor still has obligations regarding the comparatives. Under the comparative financial statements approach, the prior period data constitutes a full set of financial statements presented alongside the current period. The auditor's opinion then covers each period separately.
For most European audit engagements, the applicable framework (IFRS, Dutch GAAP under RJ, German HGB, Belgian GAAP) uses corresponding figures. This means the auditor does not re-opine on the prior period. However, ISA 710.11–12 still require the auditor to evaluate whether the comparative information has been appropriately presented and classified, and whether the accounting policies reflected in the comparative information are consistent with those applied in the current period. If the prior period was audited by a predecessor firm, ISA 710.19 requires an Other Matter paragraph in the auditor's report.
The practical consequence is that comparative information is not just last year's numbers carried forward. If the client restated prior period figures under IAS 8.42, the auditor must evaluate the restatement. If the classification of a balance changed between periods, the auditor must assess whether the reclassification is appropriate and adequately disclosed.
Key Points
- The applicable financial reporting framework determines whether an entity presents corresponding figures or comparative financial statements.
- The auditor's reporting responsibilities differ depending on which approach the client uses.
- Under IFRS and most European frameworks, corresponding figures are the default presentation.
- Prior period misstatements discovered in the current year affect comparative information and may require restatement under IAS 8.
Why it matters in practice
Teams frequently fail to evaluate whether restated comparatives comply with IAS 8's disclosure requirements. Confirming that the numbers are correct is not enough. IAS 8.49 requires disclosure of the nature of the prior period error and the correction amount for each affected financial statement line item. Missing disclosures in the comparatives create a qualification risk the team may not have anticipated.
When a predecessor firm audited the prior year and the comparatives have been restated, the current auditor sometimes omits the Other Matter paragraph required by ISA 710.19. The restatement does not remove the predecessor auditor disclosure obligation. Both the OM paragraph and any EOM paragraph relating to the restatement may be required simultaneously.
Worked example: Byrne Analytics Ltd
Client: Irish technology company, FY2024, revenue €22M, IFRS reporter. First-year audit (predecessor firm: Murphy Grant & Co. audited FY2023). During the FY2024 audit, the engagement team discovered that the client had reclassified €1.8M of development costs from intangible assets to operating expenses in the FY2023 comparatives (voluntary policy change under IAS 8) and restated FY2023 revenue by €340K due to an error in licence revenue timing under IFRS 15.
Evaluate the restatement: The €340K revenue error originated in FY2023 when the client recognised licence revenue at a point in time instead of over the access period. The restatement reduces FY2023 revenue and increases the deferred revenue balance carried forward. The team assessed the IAS 8.41–42 disclosure requirements and confirmed completeness.
Assess the accounting policy change: The reclassification of €1.8M in development costs was applied retrospectively under IAS 8.14. The team confirmed the client disclosed the nature of the change, the reasons, and the adjustment amounts for each affected line item (IAS 8.29).
Determine reporting implications: The current period opinion covers FY2024 only (corresponding figures approach). An Other Matter paragraph is mandatory under ISA 710.19 for the predecessor auditor. The team also evaluated whether an emphasis of matter paragraph is warranted under ISA 706.8 for the restatement. The approach is defensible because the file separately addresses both the error correction and the policy change.
Comparative information vs corresponding figures
Comparative information is the umbrella concept. Corresponding figures are one of two methods for presenting it. Under corresponding figures, the prior period data is presented as part of the current period statements and the auditor's opinion covers the current period only. Under comparative financial statements, the prior period data is a separate complete set of statements and the auditor's opinion covers both periods.
All frameworks require some form of comparative information. IFRS, RJ, HGB, and Belgian GAAP use the corresponding figures method. US GAAP typically requires comparative financial statements. The choice is not the auditor's – the applicable framework dictates which approach the client uses.
Key standard references
- ISA 710.1–5: Scope and definitions of comparative information, corresponding figures, and comparative financial statements.
- ISA 710.11–12: Auditor's evaluation of corresponding figures for appropriate presentation and consistent policies.
- ISA 710.19: Mandatory Other Matter paragraph when a predecessor auditor audited the prior period.
- IAS 8.42–49: Requirements for correction of prior period errors and related disclosures.
- IAS 1.38: IFRS requirement for comparative information in the financial statements.
Related terms
Related reading
Frequently asked questions
What happens when prior period comparatives have been restated?
The auditor must evaluate whether the restatement complies with IAS 8's disclosure requirements, including the nature of the error and the correction amount for each affected line item. Confirming the numbers alone is not sufficient. Missing IAS 8.49 disclosures create a qualification risk.
Is an Other Matter paragraph required when a predecessor auditor was involved?
Yes. ISA 710.19 makes it mandatory when a predecessor firm audited the prior period comparatives. The paragraph must identify the predecessor, the type of opinion, the report date, and whether the opinion was modified. A restatement of comparatives does not remove this obligation.