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    CA Final Advanced Auditing and Professional Ethics,Paper 3, Chapter 1, Part 6 of 7

    CA. Siddharth Agarwal

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    To understand the Standards on Auditing conceptually.

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

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    800 899 Specialized Areas

    SA 800 Audits of Financial Statements Prepared in Accordance

    with Special Purpose Frameworks

    SA 805 Special Considerations - Audits of Single Financial

    Statements and Specific Elements, Accounts or Items of aFinancial Statement

    SA 810 Engagements to Report on Summary Financial

    Statements

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    Special Purpose Financial StatementsScope

    Special purpose financial statements (SPFS)

    Special purpose financial reportingframework (SPFRF)Definitions

    Special points to be considered by theAuditorSpecial Points

    Forming an Opinion & ReportingConsiderations

    ReportingConsiderations

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    The Standards on Auditing (SAs) in the 100-700series apply to an audit of financial statements.This SA deals with special considerations in theapplication of those SAs to an audit of financialstatements prepared in accordance with a specialpurpose framework.

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    Special purpose financial statementsFinancial statements prepared in accordancewith a special purpose framework.

    Special purpose framework A financialreporting framework designed to meet thefinancial information needs of specific users.

    The financial reporting framework may be a fairpresentation framework or a complianceframework.

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    The financial reporting provisions established by aregulator [SEC] (Securities Exchange Commission) tomeet the requirements of that regulator; or

    The financial reporting provisions of a contract, such asa Debenture Trust deed, loan agreement, or a projectgrant.

    The financial reporting provisions for a merger oramalgamation.

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    Materiality may be different.1 TCWG may not have a responsibility to oversee SPFS, so

    communicating the matters with TCWG as per SA 260 may notbe possible in general.2 It will change the written representations to be obtained from

    the management.3 The requirements of the Special Purpose Financial Reporting

    Framework may be significantly different from the AccountingStandards.4

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    (1) Apply SA 700(R).

    (2) Also include the following in the Audit Report:

    Describe the purposefor which FS are prepared &intended users.

    Evaluate whether FS adequately describe the FRFapplied in the Notes on Accounts.

    Include Emphasis of Matter paragraphto alert usersregarding application of special purpose FRF

    FS may not be suitable for another purpose.

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    SINGLE FINANCIAL STATEMENTMeaning

    Why it is not practicable to audit SFS if you

    are not also engaged to audit complete FS

    Accepting the

    Engagement

    Special Considerations on Audit of Single FSor specific items.Special Points

    Forming an Opinion & ReportingConsiderations

    ReportingConsiderations

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    A single financial statement (for example, a cashflow statement) or a specific element of a financialstatement (for example, cash and bank balances)

    including the related notes.The related notes ordinarily comprise a summaryof significant accounting policies and otherexplanatory information relevant to the financialstatement or to the element.

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    Why it is not practicable to audit SFS if you are notalso engaged to audit complete FS:

    The auditor often does not have thesame understanding of the entity and its

    environment, including its internalcontrol, as an auditor who also auditsthe entitys complete set of financial

    statements.

    The auditor also does not have theaudit evidence about the general quality

    of the accounting records or otheraccounting information that would be

    acquired in an audit of the entityscomplete set of financial statements.

    If auditor not also engaged to audit the complete FS,consider the practicability of audit of SFS in accordance

    with SAs.

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    When auditing Single FS in conjunction with full FS, auditevidence obtained as part of audit of full FS may beuseful but auditor nevertheless needs to plan & performaudit of Single FS to obtain SAAE.

    Materiality of Single FS < materiality for full FS

    If also engaged to report on full FS, express separateopinion on each engagement.

    If it is necessary to issue Adverse opinion / Disclaimer ofOpinion on FULL FS, then unmodified opinion on SFScannot be expressed.

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    (1) Apply SA 700(R).

    (2) Also include the following in the AuditReport:

    Describe the intended users for whom Single FS havebeen prepared.

    Evaluate whether FS adequately describe the FRFapplied in preparing Single FS in the Notes onAccounts.

    Include Emphasis of Matter paragraph.

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    SUMMARY FINANCIAL STATEMENTMeaning

    Why it is not practicable to audit Summary

    FS if you are not also engaged to auditcomplete FS

    Accepting theEngagement

    Criteria for preparing Summary financialstatementsCriteria

    What extra points should be stated in theReport on Summary FS?

    ReportingResponsibilities

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    Historical financial information that is derived fromfinancial statements but that contains less detail

    than the financial statements, while still providing astructured representation consistent with thatprovided by the financial statements of the entityseconomic resources or obligations at a point intime or the changes therein for a period of time.

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    Why it is not practicable to audit Summary FS if youare not also engaged to audit complete FS

    The auditor often does not have thesame understanding of the entity and its

    environment, including its internalcontrol, as an auditor who also auditsthe entitys complete set of financial

    statements.

    The auditor also does not have theaudit evidence about the general quality

    of the accounting records or otheraccounting information that would be

    acquired in an audit of the entityscomplete set of financial statements.

    If auditor not also engaged to audit the complete FS,then he should not accept audit of Summary FS.

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    Either it is laid down by the Regulator or it is developed by themanagement. Here the main responsibility of the auditor is to checkwhether the Summary financial statements complies with CRITERIA ornot.

    He is not supposed to carry out the main audit procedures as he hasalready done the same at the time of audit ing complete detailed FS.

    He relies on the audited FS and checks whether the Summary FShave been prepared as per the laid cri teria or not.

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

    A statement indicating that SFS do not contain all thedisclosures required by FRF applied in the preparation ofaudited FS, and that reading SFS is not a substitute forreading the audited FS.

    The audit report on the Summary FS is usuallyaccompanied by the Audit Report on the detailed FS andthe audit report on the Summary FS should refer to theAudit Report on the detailed FS.

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    800 899 Specialized Areas

    SA 800 Audits of Financial Statements Prepared in Accordance

    with Special Purpose Frameworks

    SA 805 Special Considerations - Audits of Single Financial

    Statements and Specific Elements, Accounts or Items of aFinancial Statement

    SA 810 Engagements to Report on Summary Financial

    Statements

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