STATEMENT ON AUDITING PROCEDURE
Reports Following a Pooling of Interests
(Supersedes Statement on Auditing Procedure No. 40)*
1. When companies have merged or combined in accordance with the accounting concept known as a "pooling of interests," appropriate effect of the pooling should be given in the presenta-tion of financial position, results of operations and other historical financial data of the continuing business for the year in which the combination is consummated and, in comparative financial state-ments, for years prior to the year of pooling, as described in Accounting Principles Board Opinion No. 16, "Business Com-binations." If prior year financial statements, presented in com-parison with current year financial statements, are not restated to give appropriate recognition to a pooling of interests, the com-parative financial statements are not presented on a consistent basis. In this case, the inconsistency arises not from a change in the application of an accounting principle in the current year, but from the lack of such application to prior years. Such incon-sistency would require a qualification in the independent auditor's report. In addition, failure to give appropriate recognition to the pooling in comparative financial statements is a departure from an
'Statement on Auditing Procedure No. 40 superseded paragraphs 35-36 of Chapter 8 of Statement on Auditing Procedure No. 33, which remain superseded by this Statement.
Issued by the Committee on Auditing Procedure American Institute of Certified Public Accountants
COPYRIGHT 1971 BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, INC.
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