Comparatives (Ref: Para. 23-24)
A24. If the audited financial statements contain comparatives, there is a presumption that the summary financial statements also would contain comparatives. Comparatives in the audited financial statements may be regarded as corresponding figures or as comparative financial information. SA 710 describes how this difference affects the auditor’s report on the financial statements, including, in particular, reference to other auditors who audited the financial statements for the prior period.
A25. Circumstances that may affect the auditor’s determination whether an omission of comparatives is reasonable include the nature and objective of the summary financial statements, the applied criteria, and the information needs of the intended users of the summary financial statements.
Financial Statements (Ref: Para. 25)
A26. SA 700(Revised)17 contains requirements and guidance to be applied when unaudited supplementary information is presented with the audited financial statements that, adapted as necessary in the circumstances, may be helpful in applying the requirement in paragraph 25.
Other Considerations (Ref: Para. 26-27)
A27. Other appropriate actions the auditor may take when management does not take the requested action may include informing the intended users and other known third-party users of the inappropriate reference to the auditor. The auditor’s course of action depends on the auditor’s legal rights and obligations. Consequently, the auditor may consider it appropriate to seek legal advice.
Material Modifications vis-a-vis ISA 810(Revised), “Engagements to
Report on Summary Financial Statements”
Paragraph 5 of ISA 810(Revised) [paragraph 5 of SA 810(Revised)] requires the auditor to accept an engagement to report on summary financial statements in accordance with this ISA only when the auditor has been engaged to conduct an audit in accordance with ISAs of the financial statements from which the summary financial statements are derived. In India, in some cases, the auditor may be required by a law or a regulation governing the entity to report on summary financial statements even for such accounting periods for which the former was not engaged to conduct the audit in accordance with SAs of the financial statements pertaining to such accounting periods. For example, in case of the report of the auditor of the company to be included in a prospectus as per requirements of the SEBI(Issue of Capital and Disclosure Requirements) Regulations 2018, such auditor might not necessarily have been the auditor of all or some of the financial statements of the 17 SA 700(Revised), “Forming an Opinion and Reporting on Financial Statements”, paragraphs 52-53. company in respect of the accounting periods relating to which financial information has been reported upon by him/ her in the aforementioned report. Accordingly, the word “ordinarily” has been added in paragraph 5 of this SA to cover these situations and correspondingly footnote no. 3 has also been added.
Illustrations of Independent Auditor’s Reports on Summary
• Illustration 1: An auditor’s report on summary financial statements prepared in accordance with established criteria. An unmodified opinion is expressed on the audited financial statements. The auditor’s report on the summary financial statements is dated later than the date of the auditor’s report on the financial statements from which the summary financial statements are derived. The auditor's report on the audited financial statements includes a Material Uncertainty Related to Going Concern section and communication of other key audit matters. • Illustration 2: An auditor’s report on summary financial statements prepared in accordance with criteria developed by management and adequately disclosed in the summary financial statements. The auditor has determined that the applied criteria are acceptable in the circumstances. An unmodified opinion is expressed on the audited financial statements. The auditor’s report on the summary financial statements is dated the same as the date of the auditor’s report on the financial statements from which the summary financial statements are derived. The auditor’s report on the audited financial statements includes a statement that describes an uncorrected material misstatement of the other information. The other information to which this uncorrected material misstatement relates is also information included in a document containing the summary financial statements and the auditor’s report thereon. • Illustration 3: An auditor’s report on summary financial statements prepared in accordance with criteria developed by management and adequately disclosed in the summary financial statements. The auditor has determined that the applied criteria are acceptable in the circumstances. A qualified opinion is expressed on the audited financial statements. The auditor’s report on the summary financial statements is dated the same as the date of the auditor’s report on the financial statements from which the summary financial statements are derived. • Illustration 4: An auditor’s report on summary financial statements prepared in accordance with criteria developed by management and adequately disclosed in the summary financial statements. The auditor has determined that the applied criteria are acceptable in the circumstances. An adverse opinion is expressed on the audited financial statements. The auditor’s report on the summary financial statements is dated the same as the date of the auditor’s report on the financial statements from which the summary financial statements are derived. • Illustration 5: An auditor’s report on summary financial statements prepared in accordance with established criteria. An unmodified opinion is expressed on the audited financial statements. The auditor concludes that it is not possible to express an unmodified opinion on the summary financial statements. The 18 It may be noted that auditor’s report formats are illustrative in nature and necessary changes may be made as per the facts and circumstances of the audit for example due to changes in applicable financial reporting framework, applicable laws and regulations, pronouncements issued by ICAI. auditor’s report on the summary financial statements is dated the same as the date of the auditor’s report on the financial statements from which the summary financial statements are derived. Illustration 1: Circumstances include the following: • An unmodified opinion is expressed on the audited financial statements of a listed company. • Established criteria for the preparation of summary financial statements exist. • The auditor’s report on the summary financial statements is dated later than the date of the auditor’s report on the financial statements from which the summary financial statements are derived. • The auditor’s report on the audited financial statements includes a Material Uncertainty Related to Going Concern section. • The auditor’s report on the audited financial statements includes communication of other key audit matters.19
REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARY FINANCIAL
The summary financial statements, which comprise the summary balance sheet as at March 31, 20XX, the summary statement of profit & loss, and summary cash flow statement for the year then ended, and related notes, are derived from the audited financial statements of ABC Company Limited for the year ended March 31, 20XX. In our opinion, the accompanying summary financial statements are a fair summary of the audited financial statements, in accordance with the Accounting Standards notified under the Companies Act, 2013 and the accounting principles generally accepted in India20.
Summary Financial Statements
The summary financial statements do not contain all the disclosures required by the Accounting Standards notified under the Companies Act, 2013 [applied in the preparation of the audited financial statements of ABC Company Limited]. Reading the summary financial statements and the auditor’s report thereon, therefore, is not a substitute for reading the audited financial statements and the auditor’s report thereon. The summary financial statements and the audited financial statements do not reflect the effects of events that occurred subsequent to the date of our report on the audited financial statements.
The Audited Financial Statements and Our Report Thereon
We expressed an unmodified audit opinion on the audited financial statements in our report dated 15 May 20XX. That report also includes: • A Material Uncertainty Related to Going Concern section that draws attention to 19 As explained in paragraph 15 of SA 701, a material uncertainty related to going concern is, by its nature, a key audit matter but is required to be reported in a separate section of the auditor’s report in accordance with paragraph 22 of SA 570(Revised). 20 Or such other criteria, as may be agreed upon in the terms of the engagement. Note 6 in the audited financial statements. Note 6 of the audited financial statements indicates that ABC Company Limited incurred a net loss of Rs. ZZZ during the year ended March 31, 20XX and, as of that date, ABC Company Limited current liabilities exceeded its total assets by Rs. YYY. These events or conditions, along with other matters as set forth in Note 6 of the audited financial statements, indicate that a material uncertainty exists that may cast significant doubt on ABC Company Limited ability to continue as a going concern. These matters are addressed in Note 5 of the summary financial statements. • The communication of other21 key audit matters. [Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period.]22
Management’s Responsibility for the Summary Financial Statements
The Board of Directors of the Company is responsible for the preparation of the summary financial statements in accordance with the Accounting Standards notified under the Companies Act, 2013 and the accounting principles generally accepted in India23].
Our responsibility is to express an opinion on whether the summary financial statements are a fair summary of the audited financial statements based on our procedures, which were conducted in accordance with Standard on Auditing (SA) 810(Revised), “Engagements to Report on Summary Financial Statements”. For XYZ and Co.
Firm’s Registration Number
(Name of the Member Signing the Auditor’s Report) (Designation24)
21 In the circumstances where there is no material uncertainty related to going concern, inclusion of the word "other" in the statement for the communication of key audit matters would not be necessary. 22 The auditor may include additional explanation about key audit matters considered helpful to users of the auditor’s report on the summary financial statements. 23 Or such other criteria, as may be agreed upon in the terms of the engagement. 24 Partner or Proprietor, as the case may be. Illustration 2: Circumstances include the following: • An unmodified opinion is expressed on the audited financial statements of a non- corporate entity. • Criteria are developed by management and adequately disclosed in Note X. The auditor has determined that the criteria are acceptable in the circumstances. • The auditor’s report on the summary financial statements is dated the same as the date of the auditor’s report on the financial statements from which the summary financial statements are derived. • The auditor’s report on the audited financial statements includes a statement that describes an uncorrected material misstatement of the other information. The other information to which this uncorrected material misstatement relates is also information included in a document containing the summary financial statements and the auditor’s report thereon.
REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARY FINANCIAL
The summary financial statements, which comprise the summary balance sheet as at March 31, 20XX, the summary statement of profit & loss, and summary cash flow statement for the year then ended, and related notes, are derived from the audited financial statements of ABC & Associates for the year ended March 31, 20XX. In our opinion, the accompanying summary financial statements are consistent, in all material respects, with (or are a fair summary of) the audited financial statements, on the basis described in Note X.
Summary Financial Statements
The summary financial statements do not contain all the disclosures required by [describe financial reporting framework applied in the preparation of the audited financial statements of ABC & Associates]. Reading the summary financial statements and the auditor’s report thereon, therefore, is not a substitute for reading the audited financial statements and the auditor’s report thereon.
The Audited Financial Statements and Our Report Thereon
We expressed an unmodified audit opinion on the audited financial statements in our report dated May 15, 20XX. [The audited financial statements are included in the 20XX Annual Report. The auditor’s report on the audited financial statements includes a statement that describes an uncorrected material misstatement of other information within Management’s Discussion and Analysis of the 20XX Annual Report. Management’s Discussion and Analysis, and the uncorrected material misstatement of the other information therein, are also contained in the 20XX Summary Annual Report.] [Describe the uncorrected material misstatement of the other information].
Management’s Responsibility for the Summary Financial Statements
The management is responsible for the preparation of the summary financial statements on the basis described in Note X.
Our responsibility is to express an opinion on whether the summary financial statements are consistent, in all material respects, with (or are a fair summary of) the audited financial statements based on our procedures, which were conducted in accordance with Standard on Auditing (SA) 810(Revised), “Engagements to Report on Summary Financial Statements”. For XYZ and Co.
Firm’s Registration Number
(Name of the Member Signing the Auditor’s Report) (Designation25)
25 Partner or Proprietor, as the case may be. Illustration 3: Circumstances include the following: • A qualified opinion is expressed on the audited financial statements of a non- corporate entity. • Criteria are developed by management and adequately disclosed in Note X. The auditor has determined that the criteria are acceptable in the circumstances. • The auditor’s report on the summary financial statements is dated the same as the date of the auditor’s report on the financial statements from which the summary financial statements are derived.
REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARY FINANCIAL
The summary financial statements, which comprise the summary balance sheet as at March 31, 20XX, the summary statement of profit & loss, and summary cash flow statement for the year then ended, and related notes, are derived from the audited financial statements of ABC & Associates for the year ended March 31, 20XX. We expressed a qualified audit opinion on those financial statements in our report dated May 15, 20XX26. In our opinion, the accompanying summary financial statements are consistent, in all material respects, with (or are a fair summary) of the audited financial statements, on the basis described in Note X. However, the summary financial statements are misstated to the equivalent extent as the audited financial statements of ABC & Associates for the year ended March 31, 20XX.
Summary Financial Statements
The summary financial statements do not contain all the disclosures required by [describe financial reporting framework applied in the preparation of the audited financial statements of ABC & Associates]. Reading the summary financial statements and the auditor’s report thereon, therefore, is not a substitute for reading the audited financial statements and the auditor’s report thereon.
The Audited Financial Statements and Our Report Thereon
We expressed a qualified audit opinion on the audited financial statements in our report dated May 15, 20XX. The basis for our qualified audit opinion was that the management has not stated the inventories at the lower of cost and net realisable value but has stated them solely at cost, which constitutes a departure from the Accounting Standard (AS) 2, “Valuation of Inventories”. The company’s records indicate that had management stated the inventories at the lower of cost and net realisable value, an amount of Rs. XXX would have been required to write the inventories down to their net realisable value. Accordingly, cost of sales would have 26 The positioning of this reference to the qualified opinion in the auditor’s report on the audited financial statements in the Opinion paragraph on the summary financial statements assists users in understanding that although the auditor has expressed an unmodified opinion on the summary financial statements, the summary financial statements reflect audited financial statements that are materially misstated. been increased by Rs. XXX, and income tax, net income and shareholders’ equity would have been reduced by Rs. XXX, Rs. XXX and Rs. XXX respectively.
Management’s Responsibility for the Summary Financial Statements
The management is responsible for the preparation of the summary financial statements on the basis described in Note X.
Our responsibility is to express an opinion on whether the summary financial statements are consistent, in all material respects, with (or are a fair summary of) the audited financial statements based on our procedures, which were conducted in accordance with Standard on Auditing (SA) 810(Revised), “Engagements to Report on Summary Financial Statements”. For XYZ and Co.
Firm’s Registration Number
(Name of the Member Signing the Auditor’s Report) (Designation27)
27 Partner or Proprietor, as the case may be. Illustration 4: Circumstances include the following: • An adverse opinion is expressed on the audited financial statements of a non- corporate entity. • Criteria are developed by management and adequately disclosed in Note X. The auditor has determined that the criteria are acceptable in the circumstances. • The auditor’s report on the summary financial statements is dated the same as the date of the auditor’s report on the financial statements from which the summary financial statements are derived.
REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARY FINANCIAL
The summary financial statements, which comprise the summary balance sheet as at March 31, 20XX, the summary statement of profit & loss, and summary cash flow statement for the year then ended, and related notes, are derived from the audited financial statements of ABC & Associates for the year ended March 31, 20XX. As a result of the adverse opinion on the audited financial statements discussed in the “Audited Financial Statements and our Report Thereon” section of our report, it is inappropriate to express an opinion on the summary financial statements.
Summary Financial Statements
The summary financial statements do not contain all the disclosures required by [describe financial reporting framework applied in the preparation of the audited financial statements of ABC & Associates]. Reading the summary financial statements and the auditor’s report thereon, therefore, is not a substitute for reading the audited financial statements and the auditor’s report thereon.
The Audited Financial Statements and Our Report Thereon
In our report dated May 15, 20XX, we expressed an adverse audit opinion on the audited financial statements of ABC & Associates for the year ended March 31, 20XX. The basis for our adverse audit opinion was [describe basis for adverse audit opinion].
Management’s Responsibility for the Summary Financial Statements
The management is responsible for the preparation of the summary financial statements on the basis described in Note X.
Our responsibility is to express an opinion on whether the summary financial statements are consistent, in all material respects, with (or are a fair summary of) the audited financial statements based on our procedures, which were conducted in accordance with Standard on Auditing (SA) 810(Revised), “Engagements to Report on Summary Financial Statements”. For XYZ and Co.
Firm’s Registration Number
(Name of the Member Signing the Auditor’s Report) (Designation28)
28 Partner or Proprietor, as the case may be. Illustration 5: Circumstances include the following: • An unmodified opinion is expressed on the audited financial statements of an unlisted company. • Established criteria for the preparation of summary financial statements exist. • The auditor concludes that it is not possible to express an unmodified opinion on the summary financial statements. • The auditor’s report on the summary financial statements is dated the same as the date of the auditor’s report on the financial statements from which the summary financial statements are derived.
REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARY FINANCIAL
The summary financial statements, which comprise the summary balance sheet as at March 31, 20XX, the summary statement of profit & loss, and summary cash flow statement for the year then ended, and related notes, are derived from the audited financial statements of ABC Company Limited for the year ended March 31, 20XX. In our opinion, because of the significance of the matter described in the Basis for Adverse Opinion section, the accompanying summary financial statements are not a fair summary of the audited financial statements of ABC Company Limited for the year ended March 31, 20XX, in accordance with the Accounting Standards notified under the Companies Act, 2013 and the accounting principles generally accepted in India.
Basis for Adverse Opinion
[Describe matter that caused the summary financial statements not to be a fair summary of the audited financial statements, in accordance with the applied criteria.]
Summary Financial Statements
The summary financial statements do not contain all the disclosures required by the Accounting Standards notified under the Companies Act, 2013 [applied in the preparation of the audited financial statements of ABC Company Limited]. Reading the summary financial statements and the auditor’s report thereon, therefore, is not a substitute for reading the audited financial statements and the auditor’s report thereon.
The Audited Financial Statements and Our Report Thereon
We expressed an unmodified audit opinion on the audited financial statements in our report dated 15 May 20XX. Management’s Responsibility for the Summary Audited Financial Statements The Board of Directors of the Company is responsible for the preparation of the summary financial statements in accordance with the Accounting Standards notified under the Companies Act, 2013 and the accounting principles generally accepted in India.
Our responsibility is to express an opinion on whether the summary financial statements are a fair summary of the audited financial statements based on our procedures, which were conducted in accordance with Standard on Auditing (SA) 810(Revised), “Engagements to Report on Summary Financial Statements”. For XYZ and Co.
Firm’s Registration Number
(Name of the Member Signing the Auditor’s Report) (Designation29)
29 Partner or Proprietor, as the case may be.
