SA 710 Comparative Information
SA 710*
Comparative Information - Corresponding
Figures and Comparative
Financial Statements
(Effective for audits of financial statements for periods
beginning on or after April 1, 2011)
Contents
Paragraph(s)
Introduction
Scope of this SA..................................................................................... 1-3
Effective Date ............................................................................................ 4
Objectives ............................................................................................... 5
Definitions ............................................................................................... 6
Requirements
Audit Procedures ................................................................................... 7-9
Audit Reporting ................................................................................. 10-19
Application and Other Explanatory Material
Audit Procedures .................................................................................... A1
Audit Reporting .............................................................................. A2-A13
Material Modifications vis-a-vis ISA 710, “Comparative Information—
Corresponding Figures and Comparative Financial Statements”
Appendix: Illustrations of Independent Auditor’s Reports
Standard on Auditing (SA) 710, “Comparative Information—
Corresponding Figures and Comparative Financial Statements” should
be read in the context of the “Preface to the Standards on Quality
Control, Auditing, Review, Other Assurance and Related Services ”,
which sets out the authority of SAs and SA 200, “Overall Objectives of
the Independent Auditor and the Conduct of an Audit in Accordance with
Standards on Auditing”.
*
Published in the April, 2010 issue of the Journal.
Introduction
Scope of this SA
1. This Standard on Auditing (SA) deals with the auditor’s responsibilities
regarding comparative information in an audit of financial statements. When the
financial statements of the prior period have been audited by a predecessor
auditor or were not audited, the requirements and guidance in SA 5101 regarding
opening balances also apply.
The Nature of Comparative Information
2. The nature of the comparative information that is presented in an entity’s
financial statements depends on the requirements of the applicable financial
reporting framework. There are two different broad approaches to the auditor’s
reporting responsibilities in respect of such comparative information:
corresponding figures2 and comparative financial statements. The approach to
be adopted is often specified by law or regulation but may also be specified in
the terms of engagement.
3. The essential audit reporting differences between the approaches are:
(a) For corresponding figures, the auditor’s opinion on the financial statements
refers to the current period only; whereas
(b) For comparative financial statements, the auditor’s opinion refers to each
period for which financial statements are presented.
This SA addresses separately the auditor’s reporting requirements for each
approach.
Effective Date
4. This SA is effective for audits of financial statements for periods beginning
on or after April 1, 2011.
Objectives
5. The objectives of the auditor are:
(a) To obtain sufficient appropriate audit evidence about whether the
comparative information included in the financial statements has been
presented, in all material respects, in accordance with the requirements for
comparative information in the applicable financial reporting framework; and
(b) To report in accordance with the auditor’s reporting responsibilities.
1
SA 510, “Initial Audit Engagements—Opening Balances”.
2
Typically, financial reporting frameworks in India use the corresponding figures approach for
general purpose financial statements.
SA 710 2
Definitions
6. For purposes of the SAs, the following terms have the meanings attributed
below:
(a) Comparative information – The amounts and disclosures included in the
financial statements in respect of one or more prior periods in accordance
with the applicable financial reporting framework.
(b) Corresponding figures – Comparative information where amounts and other
disclosures for the prior period are included as an integral part of the
current period financial statements, and are intended to be read only in
relation to the amounts and other disclosures relating to the current period
(referred to as “current period figures”). The level of detail presented in the
corresponding amounts and disclosures is dictated primarily by its
relevance to the current period figures.
(c) Comparative financial statements – Comparative information where
amounts and other disclosures for the prior period are included for
comparison with the financial statements of the current period but, if
audited, are referred to in the auditor’s opinion. The level of information
included in those comparative financial statements is comparable with that
of the financial statements of the current period.
For purposes of this SA, references to “prior period” should be read as “prior
periods” when the comparative information includes amounts and disclosures
for more than one period.
Requirements
Audit Procedures
7. The auditor shall determine whether the financial statements include the
comparative information required by the applicable financial reporting framework
and whether such information is appropriately classified. For this purpose, the
auditor shall evaluate whether:
(a) The comparative information agrees with the amounts and other
disclosures presented in the prior period; and
(b) The accounting policies reflected in the comparative information are
consistent with those applied in the current period or, if there have been
changes in accounting policies, whether those changes have been
properly accounted for and adequately presented and disclosed.
8. If the auditor becomes aware of a possible material misstatement in the
3 SA 710
comparative information while performing the current period audit, the auditor
shall perform such additional audit procedures as are necessary in the
circumstances to obtain sufficient appropriate audit evidence to determine
whether a material misstatement exists. If the auditor had audited the prior
period’s financial statements, the auditor shall also follow the relevant
requirements of SA 5603.
9. As required by SA 5804, the auditor shall request written representations for
all periods referred to in the auditor’s opinion. The auditor shall also obtain a
specific written representation regarding any prior period item that is separately
disclosed in the current year’s statement of profit and loss.(Ref: Para. A1)
Audit Reporting
Corresponding Figures
10. When corresponding figures are presented, the auditor’s opinion shall not
refer to the corresponding figures except in the circumstances described in
paragraphs 11, 12, and 14. (Ref: Para. A2)
11. If the auditor’s report on the prior period, as previously issued, included a
qualified opinion, a disclaimer of opinion, or an adverse opinion and the matter
which gave rise to the modification is unresolved, the auditor shall modify the
auditor’s opinion on the current period’s financial statements. In the Basis for
Modification paragraph in the auditor’s report, the auditor shall either:
(a) Refer to both the current period’s figures and the corresponding figures in the
description of the matter giving rise to the modification when the effects or
possible effects of the matter on the current period’s figures are material; or
(b) In other cases, explain that the audit opinion has been modified because of
the effects or possible effects of the unresolved matter on the comparability
of the current period’s figures and the corresponding figures. (Ref: Para.
A3-A5)
12. If the auditor obtains audit evidence that a material misstatement exists in
the prior period financial statements on which an unmodified opinion has been
previously issued, the auditor shall verify whether the misstatement has been
dealt with as required under the applicable financial reporting framework and, if
that is not the case, the auditor shall express a qualified opinion or an adverse
opinion in the auditor’s report on the current period financial statements, modified
with respect to the corresponding figures included therein. (Ref: Para. A6)
3
SA 560, “Subsequent Events”, paragraphs 14-17.
4
SA 580, “Written Representations”, paragraph 14.
SA 710 4
Prior Period Financial Statements Audited by a Predecessor Auditor
13. If the financial statements of the prior period were audited by a predecessor
auditor and the auditor is permitted by law or regulation to refer to the
predecessor auditor’s report on the corresponding figures and decides to do so,
the auditor shall state in an Other Matter paragraph in the auditor’s report:
(a) That the financial statements of the prior period were audited by the
predecessor auditor;
(b) The type of opinion expressed by the predecessor auditor and, if the
opinion was modified, the reasons therefore; and
(c) The date of that report. (Ref: Para. A7)
Prior Period Financial Statements Not Audited
14. If the prior period financial statements were not audited, the auditor shall
state in an Other Matter paragraph in the auditor’s report that the corresponding
figures are unaudited. Such a statement does not, however, relieve the auditor of
the requirement to obtain sufficient appropriate audit evidence that the opening
balances do not contain misstatements that materially affect the current period’s
financial statements5. (Ref: Para. A7a, A8)
Comparative Financial Statements
15. When comparative financial statements are presented, the auditor’s opinion
shall refer to each period for which financial statements are presented and on
which an audit opinion is expressed. (Ref: Para. A9-A10)
16. When reporting on prior period financial statements in connection with the
current period’s audit, if the auditor’s opinion on such prior period financial
statements differs from the opinion the auditor previously expressed, the auditor
shall disclose the substantive reasons for the different opinion in an Other Matter
paragraph in accordance with SA 706(Revised)6. (Ref: Para. A11)
Prior Period Financial Statements Audited by a Predecessor Auditor
17. If the financial statements of the prior period were audited by a predecessor
auditor, in addition to expressing an opinion on the current period’s financial
statements, the auditor shall state in an Other Matter paragraph:
(a) That the financial statements of the prior period were audited by a
predecessor auditor;
5
SA 510, paragraph 6.
6
SA 706(Revised), “Emphasis of Matter Paragraphs and Other Matter Paragraphs in the
Independent Auditor’s Report”, paragraph 10.
5 SA 710
(b) The type of opinion expressed by the predecessor auditor and, if the
opinion was modified, the reasons therefor; and
(c) The date of that report,
unless the predecessor auditor’s report on the prior period’s financial statements
is revised with the financial statements.
18. If the auditor concludes that a material misstatement exists that affects the
prior period financial statements on which the predecessor auditor had previously
reported without modification, the auditor shall communicate the misstatement
with the appropriate level of management and those charged with governance
and request that the predecessor auditor be informed. If the prior period financial
statements are amended, and the predecessor auditor agrees to issue a new
auditor’s report on the amended financial statements of the prior period, the
auditor shall report only on the current period. (Ref: Para. A12)
Prior Period Financial Statements Not Audited
19. If the prior period financial statements were not audited, the auditor shall
state in an Other Matter paragraph that the comparative financial statements are
unaudited. Such a statement does not, however, relieve the auditor of the
requirement to obtain sufficient appropriate audit evidence that the opening
balances do not contain misstatements that materially affect the current period’s
financial statements7.(Ref: Para. A13)
***
Application and Other Explanatory Material
Audit Procedures
Written Representations (Ref: Para. 9)
A1. In the case of comparative financial statements, the written representations
are requested for all periods referred to in the auditor’s opinion because
management needs to re-affirm that the written representations it previously
made with respect to the prior period remain appropriate. In the case of
corresponding figures, the written representations are requested for the financial
statements of the current period only because the auditor’s opinion is on those
financial statements, which include the corresponding figures. However, the
auditor requests a specific written representation regarding any prior period item
that is separately disclosed in the current year’s statement of profit and loss.
7
SA 510, paragraph 6.
SA 710 6
Audit Reporting
Corresponding Figures
No Reference in Auditor’s Opinion (Ref: Para.10)
A2. The auditor’s opinion does not refer to the corresponding figures because
the auditor’s opinion is on the current period financial statements as a whole,
including the corresponding figures.
Modification in Auditor’s Report on the Prior Period Unresolved (Ref: Para. 11)
A3. When the auditor’s report on the prior period, as previously issued, included
a qualified opinion, a disclaimer of opinion, or an adverse opinion and the matter
which gave rise to the modified opinion is resolved and properly accounted for or
disclosed in the financial statements in accordance with the applicable financial
reporting framework, the auditor’s opinion on the current period need not refer to
the previous modification.
A4. When the auditor’s opinion on the prior period, as previously expressed,
was modified, the unresolved matter that gave rise to the modification may not
be relevant to the current period figures. Nevertheless, a qualified opinion, a
disclaimer of opinion, or an adverse opinion (as applicable) may be required on
the current period’s financial statements because of the effects or possible
effects of the unresolved matter on the comparability of the current and
corresponding figures.
A5. Illustrative examples of the auditor’s report if the auditor’s report on the prior
period included a modified opinion and the matter giving rise to the modification
is unresolved are contained in Illustrations 1 and 2 of the Appendix.
Misstatement in Prior Period Financial Statements (Ref: Para. 12)
A6. When the prior period financial statements that are misstated have not
been amended and an auditor’s report thereon has not been issued in
accordance with the requirements of SA 560, “Subsequent Events”, but the
corresponding figures have been properly dealt with as required under the
applicable financial reporting framework and the appropriate disclosures have
been made in the current period financial statements, the auditor’s report may
include an Emphasis of Matter paragraph describing the circumstances and
referring to, where relevant, disclosures that fully describe the matter that can be
found in the financial statements (see SA 706(Revised)).
Prior Period Financial Statements Audited by a Predecessor Auditor (Ref: Para.
13)
A7. An illustrative example of the auditor’s report if the prior period financial
statements were audited by a predecessor auditor and the auditor is permitted by
7 SA 710
law or regulation to refer to the predecessor auditor’s report on the
corresponding figures is contained in Illustration 3 of the Appendix.
Prior Period Financial Statements Not Audited (Ref: Para.14)
A7a. Where prior period financial statements were not audited, the auditor should
request the management to disclose this fact on the face of the current period
financial statements with respect to the corresponding figures.
A8. If the auditor is unable to obtain sufficient appropriate audit evidence
regarding the opening balances, the auditor is required by SA 705 (Revised)8 to
express a qualified opinion or disclaim an opinion on the financial statements, as
appropriate, in accordance with SA 705 (Revised). If the auditor encountered
significant difficulty in obtaining sufficient appropriate audit evidence that the
opening balances do not contain misstatements that materially affect the current
period’s financial statements, the auditor may determine this to be a key audit
9
matter in accordance with SA 701 .
Comparative Financial Statements
Reference in Auditor’s Opinion (Ref: Para. 15)
A9. Because the auditor’s report on comparative financial statements applies to
the financial statements for each of the periods presented, the auditor may
express a qualified opinion or an adverse opinion, disclaim an opinion, or include
an Emphasis of Matter paragraph with respect to one or more periods, while
expressing a different auditor’s opinion on the financial statements of the other
period.
A10. An illustrative example of the auditor’s report if the auditor is required to
report on both the current and the prior period financial statements in connection
with the current year’s audit and the prior period included a modified opinion and
the matter giving rise to the modification is unresolved, is contained in Illustration
4 of the Appendix.
Opinion on Prior Period Financial Statements Different from Previous Opinion
(Ref: Para. 16)
A11. When reporting on the prior period financial statements in connection with
the current period’s audit, the opinion expressed on the prior period financial
statements may be different from the opinion previously expressed if the auditor
becomes aware of circumstances or events that materially affect the financial
statements of a prior period during the course of the audit of the current period.
8
SA 705 (Revised), Modifications to the Opinion in the Independent Auditor’s Report.
9
SA 701, Communicating Key Audit Matters in the Independent Auditor’s Report.
SA 710 8
In some circumstances, the auditor may have additional reporting responsibilities
designed to prevent future reliance on the auditor’s previously issued report on
the prior period financial statements.
Prior Period Financial Statements Audited by a Predecessor Auditor (Ref: Para.
18)
A12. The predecessor auditor may be unable or unwilling to revise the auditor’s
report on the prior period financial statements. An Other Matter paragraph of the
auditor’s report may indicate that the predecessor auditor reported on the
financial statements of the prior period before amendment. In addition, if the
auditor is engaged to audit and obtains sufficient appropriate audit evidence to
be satisfied as to the appropriateness of the amendment, the auditor’s report
may also include the following paragraph:
As part of our audit of the 20X2 financial statements, we also audited
the adjustments described in Note X that were applied to amend the
20X1 financial statements. In our opinion, such adjustments are
appropriate and have been properly applied. We were not engaged to
audit, review, or apply any procedures to the 20X1 financial statements
of the company other than with respect to the adjustments and,
accordingly, we do not express an opinion or any other form of
assurance on the 20X1 financial statements taken as a whole.
Prior Period Financial Statements Not Audited (Ref: Para. 19)
A13. If the auditor is unable to obtain sufficient appropriate audit evidence
regarding the opening balances, the auditor is required by SA 705(Revised) to
express a qualified opinion or disclaim an opinion on the financial statements, as
appropriate, in accordance with SA 705(Revised). If the auditor encountered
significant difficulty in obtaining sufficient appropriate audit evidence that the
opening balances do not contain misstatements that materially affect the current
period’s financial statements, the auditor may determine this to be a key audit
matter in accordance with SA 701.
Material Modifications vis-a-vis ISA 710, “Comparative
Information—Corresponding Figures and Comparative
Financial Statements”
Deletions
1. Paragraphs 9 and 12 of ISA 710 (Paragraphs 9 and 12 of SA 710) deal with
the restatement of the prior period financial statements. Since in India,
Accounting Standard (AS) 5, “Net Profit or Loss for the Period, Prior Period Items
and Changes in Accounting Policies” requires that prior period items should be
9 SA 710
separately disclosed in the Statement of Profit and Loss in a manner that their
impact on the current profit or loss can be perceived, the restatement of the prior
period financial statements does not exist in the Indian scenario. Hence, to align
with the requirements of AS 5, the requirement of restatement of prior period
items has been replaced with the requirement to disclose the prior period items
in the current year’s Statement of Profit & Loss. Corresponding changes have
also been made at the relevant places of the Standard.
2. Paragraph 17 of ISA 710 (Paragraph 17 of SA 710) deals with the situation
wherein the predecessor auditor reissue his audit report. Since in India, the
nomenclature, “Reissue” is not used for the re-issuance of the audit report by an
auditor, the same has been replaced with the word, “Revised”. Corresponding
changes have also been made at the relevant places of the Standard.
SA 710 10
Appendix
(Ref: Para. A5, A7, A10)
Illustrations of Independent Auditor’s Reports
Illustration 1- Corresponding Figures
For purposes of this illustrative auditor’s report, the following circumstances are
assumed:
• Audit of a complete set of financial statements of an unlisted company
(registered under the Companies Act, 2013) using a fair presentation
framework. The audit is not a group audit (i.e., SA 600 does not apply).
• The financial statements are prepared by management of the company in
accordance with the accounting Standards prescribed under section 133 of
the Companies Act, 2013.
• The terms of the audit engagement reflect the description of management’s
responsibility for the financial statements in SA 210.
• The auditor’s report on the prior period, as previously issued, included a
qualified opinion.
• The matter giving rise to the modification is unresolved.
• The effects or possible effects of the matter on the current period’s figures
are material and require a modification to the auditor’s opinion regarding
the current period figures.
• The relevant ethical requirements that apply to the audit comprise the Code
of Ethics issued by ICAI together with the other relevant ethical
requirements relating to the audit and the auditor refers to both.
• Based on the audit evidence obtained, the auditor has concluded that a
material uncertainty does not exist related to events or conditions that may
cast significant doubt on the company’s ability to continue as a going
concern in accordance with SA 570(Revised).
• The auditor is not required, and has otherwise not decided, to communicate
key audit matters in accordance with SA 701.
• The auditor has not obtained any other information prior to the date of the
auditor’s report.
• Those responsible for oversight of the financial statements differ from those
responsible for the preparation of the financial statements.
• In addition to the audit of the financial statements, the auditor has other
reporting responsibilities required under the Companies Act, 2013.
11 SA 710
INDEPENDENT AUDITOR’S REPORT
To the Members of ABC Company Limited
Report on the Audit of the Standalone Financial Statements
Qualified Opinion
We have audited the standalone financial statements of ABC Company Limited
(“the Company”), which comprise the balance sheet as at March 31, 20X1, and
the statement of profit and loss,(statement of changes in equity)10 and
statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other
explanatory information [in which are included the Returns for the year ended on
that date audited by the branch auditors of the Company’s branches located at
11
(location of branches)] .
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter described in the
‘Basis for Qualified Opinion’ section of our report, the accompanying financial
statements give the information required by the Companies Act 2013 in the
manner so required and give a true and fair view in conformity with the
accounting principles generally accepted in India, of the state of affairs of the
12
Company as at March 31, 20XX, and its profit/loss, (changes in equity) and its
cash flows for the year ended on that date.
Basis for Qualified Opinion
As discussed in Note X to the financial statements, no depreciation has been
provided in the financial statements which constitutes a departure from the
Accounting Standards prescribed under section 133 of the Companies Act,
2013. This is the result of a decision taken by management at the start of the
preceding financial year and caused us to qualify our audit opinion on the
financial statements relating to that year. Based on the straight-line method of
depreciation and annual rates of 5% for the building and 20% for the
equipment, the loss for the year should be increased by Rs.XXX in 20X1
and Rs .XXX in 20X0, property, plant and equipment should be reduced by
accumulated depreciation of Rs.XXX in 20X1 and Rs.XXX in 20X0, and the
accumulated loss should be increased by Rs.XXX in 20X1 and Rs.XXX in
20X0.
10
Where applicable.
11
Where applicable.
12
Where applicable.
SA 710 12
We conducted our audit in accordance with the Standards on Auditing (SAs)
specified under section 143(10) of the Companies Act, 2013. Our responsibilities
under those Standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. We are independent
of the Company in accordance with the Code of Ethics issued by the Institute of
Chartered Accountants of India together with the ethical requirements that are
relevant to our audit of the financial statements under the provisions of the
Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the Code of
Ethics. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified opinion.
Responsibilities of Management and Those Charged with Governance for
the Financial Statements
[Reporting in accordance with SA 700(Revised) – see illustration 3 in SA
700(Revised)]
Auditor’s Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with SA 700(Revised) – see illustration 3 in SA
700(Revised)]
Other Matter
We did not audit the financial statements/ information of …(number) branches
included in the standalone financial statements of the company whose financial
statements/financial information reflect total assets of Rs. ……as at 31 st March
20XX and the total revenue of Rs. ………for the year ended on that date, as
considered in the standalone financial statements. The financial
statements/information of these branches have been audited by the branch
auditors whose reports have been furnished to us, and our opinion in so far as it
relates to the amounts and disclosures included in respect of branches, is based
solely on the report of such branch auditors.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with SA 700(Revised) – see illustration 3 in SA
700(Revised)]
While reporting under Section 143(3) of the Companies Act, 2013, the auditor is
required to suitably reword the wordings given in the Illustration in SA
700(Revised) to meet the circumstances of the audit.
13 SA 710
For XYZ and Co.
Chartered Accountants
Firm’s Registration Number
Signature
(Name of the Member Signing the Audit Report)
13)
(Designation
(Membership Number)
Place of Signature
Date
13
Partner or Proprietor, as the case may be.
SA 710 14
Illustration 2- Corresponding Figures
For purposes of this illustrative auditor’s report, the following circumstances are
assumed:
Audit of a complete set of financial statements of an unlisted company
(registered under the Companies Act, 2013) using a fair presentation
framework. The audit is not a group audit (i.e., SA 600 does not apply).
The financial statements are prepared by management of the company in
accordance with the accounting Standards prescribed under section 133 of
the Companies Act, 2013.
The terms of the audit engagement reflect the description of management’s
responsibility for the financial statements in SA 210.
The auditor’s report on the prior period, as previously issued, included a
qualified opinion.
The matter giving rise to the modification is unresolved.
The effects or possible effects of the matter on the current period’s figures
are immaterial but require a modification to the auditor’s opinion because of
the effects or possible effects of the unresolved matter on the comparability
of the current period’s figures and the corresponding figures.
The relevant ethical requirements that apply to the audit comprise the Code
of Ethics issued by ICAI together with the other relevant ethical requirements
relating to the audit and the auditor refers to both.
Based on the audit evidence obtained, the auditor has concluded that a
material uncertainty does not exist related to events or conditions that may
cast significant doubt on the company’s ability to continue as a going
concern in accordance with SA 570(Revised).
The auditor is not required, and has otherwise not decided, to communicate
key audit matters in accordance with SA 701.
The auditor has not obtained any other information prior to the date of the
auditor’s report.
Those responsible for oversight of the financial statements differ from those
responsible for the preparation of the financial statements.
In addition to the audit of the financial statements, the auditor has other
reporting responsibilities required under the Companies Act, 2013.
15 SA 710
INDEPENDENT AUDITOR’S REPORT
To the Members of ABC Company Limited
Report on the Audit of the Standalone Financial Statements
Qualified opinion
We have audited the standalone financial statements of ABC Company Limited
(“the Company”), which comprise the balance sheet as at March 31, 20X1, and
the statement of profit and loss, (statement of changes in equity)14 and statement
of cash flows for the year then ended, and notes to the financial statements
including a summary of significant accounting policies and other explanatory
information [in which are included the Returns for the year ended on that date
audited by the branch auditors of the Company’s branches located at (location of
branches)]15 .
In our opinion and to the best of our information and according to the
explanations given to us, except for the possible effects on the corresponding
figures of the matter described in the Basis for Qualified Opinion section of our
report, the accompanying financial statements give the information required by
the Companies Act 2013 in the manner so required and give a true and fair view
in conformity with the accounting principles generally accepted in India, of the
state of affairs of the Company as at March 31, 20XX, and its profit/loss,
(changes in equity)16 and its cash flows for the year ended on that date.
Basis for Qualified Opinion
Because we were appointed auditors of the Company during 20X0, we were
not able to observe the counting of the physical inventories at the beginning of
that period or satisfy ourselves concerning those inventory quantities by
alternative means. Since opening inventories affect the determination of the
results of operations, we were unable to determine whether adjustments to the
results of operations and opening retained earnings might be necessary for
20X0. Our audit opinion on the financial statements for the year ended 31
March, 20X0 was modified accordingly. Our opinion on the current period’s
financial statements is also modified because of the possible effect of this matter
on the comparability of the current period’s figures and the corresponding
figures.
We conducted our audit in accordance with the Standards on Auditing (SAs)
14
Where applicable.
15
Where applicable.
16
Where applicable.
SA 710 16
specified under section 143(10) of the Companies Act, 2013. Our responsibilities
under those Standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. We are independent
of the Company in accordance with the Code of Ethics issued by the Institute of
Chartered Accountants of India together with the ethical requirements that are
relevant to our audit of the financial statements under the provisions of the
Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the Code of
Ethics. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified opinion.
Responsibilities of Management and Those Charged with Governance for
the Financial Statements
[Reporting in accordance with SA 700(Revised) – see illustration 3 in SA
700(Revised)]
Auditor’s Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with SA 700(Revised) – see illustration 3 in SA
700(Revised)]
Other Matter
We did not audit the financial statements/ information of …(number) branches
included in the standalone financial statements of the company whose financial
statements/financial information reflect total assets of Rs. ……as at 31 st March
20XX and the total revenue of Rs. ………for the year ended on that date, as
considered in the standalone financial statements. The financial
statements/information of these branches have been audited by the branch
auditors whose reports have been furnished to us, and our opinion in so far as it
relates to the amounts and disclosures included in respect of branches, is based
solely on the report of such branch auditors.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with SA 700(Revised) – see illustration 3 in SA
700(Revised)]
While reporting under Section 143(3) of the Companies Act, 2013, the auditor is
required to suitably reword the wordings given in the Illustration in SA
700(Revised) to meet the circumstances of the audit.
17 SA 710
For XYZ and Co.
Chartered Accountants
Firm’s Registration Number
Signature
(Name of the Member Signing the Audit Report)
17
(Designation )
(Membership Number)
Place of Signature:
Date:
17
Partner or Proprietor, as the case may be.
SA 710 18
Illustration 3- Corresponding Figures
For purposes of this illustrative auditor’s report, the following circumstances are
assumed:
Audit of a complete set of financial statements of an unlisted company
(registered under the Companies Act, 2013) using a fair presentation
framework. The audit is not a group audit (i.e., SA 600 does not apply).
The financial statements are prepared by management of the company in
accordance with the accounting Standards prescribed under section 133 of
the Companies Act, 2013.
The terms of the audit engagement reflect the description of management’s
responsibility for the financial statements in SA 210.
The auditor has concluded an unmodified (i.e. clean) opinion is appropriate
based on the audit evidence obtained.
Corresponding figures are presented, and the prior period’s financial
statements were audited by a predecessor auditor.
The auditor is permitted by law or regulation to refer to the predecessor
auditor’s report on the corresponding figures and decides to do so.
The relevant ethical requirements that apply to the audit comprise the Code
of Ethics issued by ICAI together with the other relevant ethical
requirements relating to the audit and the auditor refers to both.
Based on the audit evidence obtained, the auditor has concluded that a
material uncertainty does not exist related to events or conditions that may
cast significant doubt on the company’s ability to continue as a going
concern in accordance with SA 570 (Revised).
The auditor is not required, and has otherwise not decided, to communicate
key audit matters in accordance with SA 701.
The auditor has not obtained any other information prior to the date of the
auditor’s report.
Those responsible for oversight of the financial statements differ from those
responsible for the preparation of the financial statements.
In addition to the audit of the financial statements, the auditor has other
reporting responsibilities required under the Companies Act, 2013.
19 SA 710
INDEPENDENT AUDITOR’S REPORT
To the Members of ABC Company Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of ABC Company Limited
(“the Company”), which comprise the balance sheet as at March 31, 20X1, and
the statement of profit and loss, (statement of changes in equity)18 and statement
of cash flows for the year then ended, and notes to the financial statements
including a summary of significant accounting policies and other explanatory
information.
In our opinion and to the best of our information and according to the
explanations given to us, the accompanying financial statements give the
information required by the Companies Act 2013 in the manner so required and
give a true and fair view in conformity with the accounting principles generally
accepted in India, of the state of affairs of the Company as at March 31, 20XX,
and its profit/loss, (changes in equity)19 and its cash flows for the year ended on
that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs)
specified under section 143(10) of the Companies Act, 2013. Our responsibilities
under those Standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. We are independent
of the Company in accordance with the Code of Ethics issued by the Institute of
Chartered Accountants of India together with the ethical requirements that are
relevant to our audit of the financial statements under the provisions of the
Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the Code of
Ethics. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Other Matter
The financial statements of the Company for the year ended March 31, 20X0,
were audited by another auditor who expressed an unmodified opinion on those
statements on June 30, 20X0.
18
Where applicable.
19
Where applicable.
SA 710 20
Responsibilities of Management and Those Charged with Governance for
the Financial Statements
[Reporting in accordance with SA 700(Revised) – see illustration 3 in SA
700(Revised)]
Auditor’s Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with SA 700(Revised) – see illustration 3 in SA
700(Revised)]
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with SA 700(Revised) – see illustration 3 in SA
700(Revised)]
While reporting under Section 143(3) of the Companies Act, 2013, the auditor is
required to suitably reword the wordings given in the Illustration in SA
700(Revised) to meet the circumstances of the audit.
For XYZ and Co.
Chartered Accountants
Firm’s Registration Number
Signature
(Name of the Member Signing the Audit Report)
20
(Designation )
(Membership Number)
Place of Signature
Date
20
Partner or Proprietor, as the case may be.
21 SA 710
Illustration 4: Comparative Financial Statements
For purposes of this illustrative auditor’s report, the following circumstances are
assumed:
Audit of a complete set of financial statements of an unlisted company
(registered under the Companies Act, 2013) using a fair presentation
framework. The audit is not a group audit (i.e., SA 600 does not apply).
The financial statements are prepared by management of the company in
accordance with the accounting Standards prescribed under section 133 of the
Companies Act, 2013.
The terms of the audit engagement reflect the description of management’s
responsibility for the financial statements in SA 210.
The auditor is required to report on both the current period financial statements
and the prior period financial statements in connection with the current year’s
audit.
The auditor’s report on the prior period, as previously issued, included a
qualified opinion.
The matter giving rise to the modification is unresolved.
The effects or possible effects of the matter on the current period’s figures are
material to both the current period financial statements and prior period financial
statements and require a modification to the auditor’s opinion.
The relevant ethical requirements that apply to the audit comprise the Code of
Ethics issued by ICAI together with the other relevant ethical requirements
relating to the audit and the auditor refers to both.
Based on the audit evidence obtained, the auditor has concluded that a
material uncertainty does not exist related to events or conditions that may cast
significant doubt on the company’s ability to continue as a going concern in
accordance with SA 570(Revised).
The auditor is not required, and has otherwise not decided, to communicate key
audit matters in accordance with SA 701.
The auditor has not obtained any other information prior to the date of the
auditor’s report.
Those responsible for oversight of the financial statements differ from those
responsible for the preparation of the financial statements.
In addition to the audit of the financial statements, the auditor has other
reporting responsibilities required under the Companies Act, 2013.
SA 710 22
INDEPENDENT AUDITOR’S REPORT
To the Members of ABC Company Limited
Report on the Audit of the Standalone Financial Statements
Qualified Opinion
We have audited the standalone financial statements of ABC Company
Limited (“the Company”), which comprise the balance sheets as at March 31,
20X1 and March 31, 20X0, and the statements of profit & loss, (statements of
21
changes in equity) and statements of cash flows for the years then ended, and
notes to the financial statements, including a summary of significant accounting
policies and other explanatory information.
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter described in the
Basis for Qualified Opinion section of our report, the accompanying financial
statements give the information required by the Companies Act 2013 in the
manner so required and give a true and fair view in conformity with the
accounting principles generally accepted in India, of the state of affairs of the
Company as at March 31, 20X1 and March 31, 20X0, and its profit/loss,
22
(changes in equity) and its cash flows for the years ended on that date.
Basis for Qualified Opinion
As discussed in Note X to the financial statements, no depreciation has been
provided in the financial statements which constitutes a departure from the
Accounting Standards prescribed under section 133 of the Companies Act,
2013. Based on the straight-line method of depreciation and annual rates of 5%
for the building and 20% for the equipment, the loss for the year should be
increased by Rs .XXX in 20X1 and Rs.XXX in 20X0, property, plant and
equipment should be reduced by accumulated depreciation of Rs.XXX in 20X1
and Rs.XXX in 20X0, and the accumulated loss should be increased by
Rs .XXX in 20X1 and Rs .XXX in 20X0.
We conducted our audit in accordance with the Standards on Auditing (SAs)
specified under section 143(10) of the Companies Act, 2013. Our responsibilities
under those Standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. We are independent
of the Company in accordance with the Code of Ethics issued by the Institute of
Chartered Accountants of India together with the ethical requirements that are
21
Where applicable.
22
Where applicable.
23 SA 710
relevant to our audit of the financial statements under the provisions of the
Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the Code of
Ethics. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified opinion.
Responsibilities of Management and Those Charged with Governance for
the Financial Statements
[Reporting in accordance with SA 700(Revised) – see illustration 3 in SA
700(Revised)]
Auditor’s Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with SA 700(Revised) – see illustration 3 in SA
700(Revised)]
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with SA 700(Revised) – see illustration 3 in SA
700(Revised)]
While reporting under Section 143(3) of the Companies Act, 2013, the auditor is
required to suitably reword the wordings given in the Illustration in SA
700(Revised) to meet the circumstances of the audit.
For XYZ and Co.
Chartered Accountants
Firm’s Registration Number
Signature
(Name of the Member Signing the Audit Report)
23)
(Designation
(Membership Number)
Place of Signature
Date
23
Partner or Proprietor, as the case may be.
SA 710 24