Page 171 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
3. Publication of Audited Single Financial Statement with Complete Set: An audited single financial
statement or an audited specific element of a financial statement may be published together with the entity’s
audited complete set of financial statements.
4A. Differentiation of Presentation and Opinion: If the auditor concludes that the presentation of a single
financial statement or of the specific element of a financial statement does not differentiate it sufficiently from
the complete set of financial statements, the auditor shall ask management to rectify the situation and shall
differentiate the opinions.
4B. Issuance of Auditor’s Report upon Satisfactory Differentiation: The auditor shall not issue the auditor’s
report containing the opinion on the single financial statement or on the specific element of a financial statement
until satisfied with the differentiation.
Effect of Modified Opinion
1A. Determine Effect of Modified Opinion: If the opinion in the auditor’s report on an entity’s complete set
of financial statements is modified, or that report includes an Emphasis of matter paragraph or other matter
paragraph, the auditor shall determine the effect on the auditor’s report on a single financial statement or on a
specific element of those financial statements.
1B. Modification of Opinion: When deemed appropriate, the auditor shall modify the opinion on the single
financial statement or on the specific element of a financial statement or include an Emphasis of matter
paragraph or other matter paragraph in the auditor’s report.
2. Unmodified Opinion not Permitted: If the auditor concludes that it is necessary to express an adverse
opinion or disclaim an opinion on the entity’s complete set of financial statements as a whole, Revised SA 705
does not permit an unmodified opinion on a single financial statement or on a specific element in the same
auditor’s report.
This is because such an unmodified opinion would contradict the adverse opinion or disclaimer of opinion on
the entity’s complete set of financial statements as a whole.
2A. Unmodified Opinion on Specific Element Permitted: If the auditor concludes that it is necessary to
express an adverse opinion or disclaim an opinion on the entity’s complete set of financial statements as a whole
but considers it appropriate to express an unmodified opinion on a specific element included in those financial
statements, the auditor shall only do so if certain conditions are met.
a) The auditor is not prohibited by law or regulation from doing so; b) That opinion is expressed in an auditor’s
report that is not published together with the auditor’s report containing the adverse opinion or disclaimer of
opinion; and c) The specific element does not constitute a major portion of the entity’s complete set of financial
statements.
2B. Unmodified Opinion on Single Financial Statement Not Permitted: The auditor shall not express an
unmodified opinion on a single financial statement of a complete set of financial statements if an adverse opinion
or a disclaimer of opinion has been expressed on the complete set. This holds even if the single financial statement
report isn't published alongside the adverse report, as a single financial statement is deemed a major portion of
the complete set.
Other Important Clarifications:
(Shortcut: DARO)
Expression of Disclaimer of Opinion: In the auditor’s report on a complete set of financial statements,
expressing a disclaimer of opinion solely on the results of operations and cash flows, while maintaining an
unmodified opinion on the state of affairs is allowed. This is because the disclaimer is specific to the results of
operations and cash flows, not the entire financial statements.
Evaluation of Adequate Disclosures: Revised SA 700 mandates the auditor to assess whether the financial
statements, including single financial statements or specific elements, along with related notes, offer sufficient
disclosures. This is crucial for enabling intended users to comprehend the impact of material transactions and
events on the information presented.

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