CPA Auditing and Attestation Practice Exam 2026 – Complete Prep Guide

When presenting unaudited financial statements alongside prior year's audited financial statements, it is important to clarify the differences in the level of assurance provided by each set of statements. Reissuing the report on the audited financial statements creates confusion and suggests a belief that the current financial condition of the entity can be inferred from the previously audited statements, which is not the case for unaudited statements.

According to guidelines for auditors, either reissuing the report or including a paragraph acknowledging the responsibility for the unaudited statements can serve to highlight that the reader should not infer assurance from the audited statements regarding the unaudited records. This approach allows for flexibility in how auditors choose to inform stakeholders about the distinction between the two sets of financial statements. The key is to ensure that the users of the financial statements are adequately informed about the difference in the level of assurance provided. Therefore, both options being presented as permissible satisfies the requirement to maintain clarity and transparency in financial reporting.