Page 226 - CA Final PARAM Digital Book.

Part 03 SA 810

QNO Factors affecting acceptability of the applied criteria New Course – (SM23)
810.100 TITANIUM CNO-- SA 810.040

List out few factors affecting auditor’s determination of the acceptability of the applied criteria before
accepting audit of summary financial statements.
Answer Concept:
Determine whether the applied criteria are acceptable
1. Applied Criteria: Applied criteria refer to the criteria applied by management in the preparation of the
summary financial statements. Management is responsible for the determination of the information that
needs to be reflected in the summary financial statements so that they are consistent, in all material respects,
with or represent a fair summary of the audited financial statements.
2. Risk in Summary Financial Statements: Because summary financial statements, by their nature contain
aggregated information and limited disclosure, there is an increased risk that they may not contain the
information necessary so as not to be misleading in the circumstances. This risk increases when established
criteria for the preparation of summary financial statements do not exist.
3A. Factors Affecting Auditor’s Determination: (Shortcut: NPI Not misleading)
Factors affecting the auditor’s determination of the acceptability of the applied criteria include the Nature
of the entity, the Purpose of the summary financial statements, the Information needs of the intended users
of the summary financial statements, and whether the applied criteria will result in summary financial
statements that are Not misleading in the circumstances.
3B. Appropriate Title (So that not Misleading): Adequate disclosure of the summarised nature of the
summary financial statements and the identity of the audited financial statements, may be provided by a
title such as
“Summary financial statements prepared from the audited financial statements for the year ended March
31, 20XX.”

Reporting on Subsequent Events in Case of Summary Financial New Course – (SM23)
QNO Statements
810.200
TITANIUM CNO-- SA 810.080

CA Madhur is auditor of a company and has issued audit report dated 15th June of a particular year. The
audit report on summary financial statements derived from such audited financial statements is dated
15th July of that particular year. Discuss whether there exists any additional reporting responsibility for
auditor in such a situation in respect of audit report on summary financial statements.
Answer The audit report on summary financial statements derived from audited financial statements is dated 15th
July of that particular year. However, the audit report on audited financial statements is dated 15th June of
that year.
In the above situation, the auditor’s report on summary financial statements should state that the summary
financial statements and the audited financial statements do not reflect the effects of events that occurred
subsequent to the date of the auditor’s report on the audited financial statements.

QNO Denial Of Opinion New Course – (SM23)
810.300 TITANIUM CNO-- SA 810.100

CA Y is auditor of a company. He has expressed adverse opinion on audited financial statements. What
additional points he has to keep in mind while expressing opinion on summary financial statements
derived from such audited financial statements?
Answer Adverse or a disclaimer of opinion
1. Situation: When the auditor’s report on the audited financial statements contains an adverse opinion
or a disclaimer of opinion, the auditor’s report on the summary financial statements shall, additionally:
2A. State Situation: When the auditor’s report on the audited financial statements contains an adverse
opinion or a disclaimer of opinion, the auditor’s report on the summary financial statements shall state
that the auditor’s report on the audited financial statements contains an adverse opinion or disclaimer
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