CA Final Advanced Auditing and Professional Ethics,

Paper 3, Chapter 1, Part 6 of 7

CA. Siddharth Agarwal

To understand the Standards on Auditing conceptually.

To be able to apply the knowledge acquired in solving
practical cases in exam.

800-899 Specialized Areas

SA 800
SA 805
SA 810

Audits of Financial Statements Prepared in Accordance

with Special Purpose Frameworks
Special Considerations - Audits of Single Financial
Statements and Specific Elements, Accounts or Items of a
Financial Statement
Engagements to Report on Summary Financial
Statements

Scope
Definitions

Special Purpose Financial Statements

Special purpose financial statements (SPFS)
Special purpose financial reporting
framework (SPFRF)

Special Points

Special points to be considered by the

Auditor

Reporting
Considerations

Forming an Opinion & Reporting

Considerations

The Standards on Auditing (SAs) in the 100-700

series apply to an audit of financial statements.
This SA deals with special considerations in the
application of those SAs to an audit of financial
statements prepared in accordance with a special
purpose framework.

Special purpose financial statements

Financial statements prepared in accordance
with a special purpose framework.
Special purpose framework A financial
reporting framework designed to meet the
financial information needs of specific users.
The financial reporting framework may be a fair
presentation framework or a compliance
framework.

The financial reporting provisions established by a

regulator [SEC] (Securities Exchange Commission) to
meet the requirements of that regulator; or
The financial reporting provisions of a contract, such as
a Debenture Trust deed, loan agreement, or a project
grant.
The financial reporting provisions for a merger or
amalgamation.

Materiality may be different.

TCWG may not have a responsibility to oversee SPFS, so

communicating the matters with TCWG as per SA 260 may not
be possible in general.

It will change the written representations to be obtained from

the management.

The requirements of the Special Purpose Financial Reporting

Framework may be significantly different from the Accounting
Standards.

(1) Apply SA 700(R).

(2) Also include the following in the Audit Report:
Describe the purpose for which FS are prepared &
intended users.
Evaluate whether FS adequately describe the FRF
applied in the Notes on Accounts.
Include Emphasis of Matter paragraph to alert users
regarding
application of special purpose FRF
FS may not be suitable for another purpose.

Meaning

SINGLE FINANCIAL STATEMENT

Accepting the
Engagement

Why it is not practicable to audit SFS if you

are not also engaged to audit complete FS

Special Points

Special Considerations on Audit of Single FS

or specific items.

Reporting
Considerations

Forming an Opinion & Reporting

Considerations

A single financial statement (for example, a cash

flow statement) or a specific element of a financial
statement (for example, cash and bank balances)
including the related notes.
The related notes ordinarily comprise a summary
of significant accounting policies and other
explanatory information relevant to the financial
statement or to the element.

If auditor not also engaged to audit the complete FS,

consider the practicability of audit of SFS in accordance
with SAs.

Why it is not practicable to audit SFS if you are not

also engaged to audit complete FS:
The auditor often does not have the
same understanding of the entity and its
environment, including its internal
control, as an auditor who also audits
the entitys complete set of financial
statements.

The auditor also does not have the

audit evidence about the general quality
of the accounting records or other
accounting information that would be
acquired in an audit of the entitys
complete set of financial statements.

When auditing Single FS in conjunction with full FS, audit

evidence obtained as part of audit of full FS may be
useful but auditor nevertheless needs to plan & perform
audit of Single FS to obtain SAAE.

Materiality of Single FS < materiality for full FS

If also engaged to report on full FS, express separate

opinion on each engagement.

If it is necessary to issue Adverse opinion / Disclaimer of

Opinion on FULL FS, then unmodified opinion on SFS
cannot be expressed.

(1) Apply SA 700(R).

(2) Also include the following in the Audit
Report:
Describe the intended users for whom Single FS have
been prepared.
Evaluate whether FS adequately describe the FRF
applied in preparing Single FS in the Notes on
Accounts.
Include Emphasis of Matter paragraph.

Meaning
Accepting the
Engagement

SUMMARY FINANCIAL STATEMENT

Why it is not practicable to audit Summary

FS if you are not also engaged to audit
complete FS

Criteria

Criteria for preparing Summary financial

statements

Reporting
Responsibilities

What extra points should be stated in the

Report on Summary FS?

Historical financial information that is derived from

financial statements but that contains less detail
than the financial statements, while still providing a
structured representation consistent with that
provided by the financial statements of the entitys
economic resources or obligations at a point in
time or the changes therein for a period of time.

If auditor not also engaged to audit the complete FS,

then he should not accept audit of Summary FS.

Why it is not practicable to audit Summary FS if you

are not also engaged to audit complete FS
The auditor often does not have the
same understanding of the entity and its
environment, including its internal
control, as an auditor who also audits
the entitys complete set of financial
statements.

The auditor also does not have the

audit evidence about the general quality
of the accounting records or other
accounting information that would be
acquired in an audit of the entitys
complete set of financial statements.

Either it is laid down by the Regulator or it is developed by the

management. Here the main responsibility of the auditor is to check
whether the Summary financial statements complies with CRITERIA or
not.
He is not supposed to carry out the main audit procedures as he has
already done the same at the time of auditing complete detailed FS.

He relies on the audited FS and checks whether the Summary FS

have been prepared as per the laid criteria or not.

Date the report on the SFS should not be earlier than the
Date of report on the audited FS.

A statement indicating that SFS do not contain all the

disclosures required by FRF applied in the preparation of
audited FS, and that reading SFS is not a substitute for
reading the audited FS.

The audit report on the Summary FS is usually

accompanied by the Audit Report on the detailed FS and
the audit report on the Summary FS should refer to the
Audit Report on the detailed FS.

800-899 Specialized Areas

SA 800
SA 805
SA 810

Audits of Financial Statements Prepared in Accordance

with Special Purpose Frameworks
Special Considerations - Audits of Single Financial
Statements and Specific Elements, Accounts or Items of a
Financial Statement
Engagements to Report on Summary Financial
Statements