Interim financial statements and the auditor's report thereon;

              Statements on Auditing
No. 8
Procedure
September 1941
•
Issued by the
Interim Financial Statements and the Auditor's Report Thereon
Committee on Auditing Procedure, American Institute of Accountants, 13 East 41st Street, New York, N. Y.
Copyright 1941 by American Institute of Accountants
SEVERAL inquiries have been received by the committee on auditing procedure as to what opinion, if any, could properly be expressed in the auditor's report covering interim monthly financial statements in those situations where audits of the usual scope are made on either a semi-annual or annual basis in accordance with generally accepted auditing standards, but where on other interim dates one or more procedures such as, for example, the confirmation of accounts re-ceivable or the examination of securities are omitted. While these inquiries are partially covered in the first statement of the committee, "Extensions of Auditing Procedure," the inquiries are of sufficient frequency to make further amplification seem desirable.
The two major questions which the inquiries appear to present are:
1. What procedures, in addition to the examination of intervening transactions incident to the usual periodical interim examination and to the examination of the regular semi-annual or annual financial statements, are necessary in order that the auditor be in a position to furnish an unqualified opinion with respect to the in-terim statements; and
2. Whether a qualified opinion would be appropriate and, if so, what should be the nature of the qualification.
Turning to receivables as illustrative of the first question, the need for confirmation is clearly indicated in "Extensions of Auditing Pro-cedure" as follows:
"That hereafter, wherever practicable and reasonable, and where the aggregate amount of notes and accounts receivable represents a significant proportion of the current assets or of the total assets of a concern, confirmation of notes and accounts receivable by direct communication with the debtors shall be regarded as generally accepted auditing procedure in the examination of the accounts of a concern whose financial statements are accompanied by an inde-pendent certified public accountant's report; ..."
It is further recognized, however, in "Extensions of Auditing Procedure" that the confirmation may properly be made at a date
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