SA 800 Special Purpose Frameworks
Standard on Auditing (SA) 800(Revised)
Special Considerations—Audits of Financial Statements Prepared
in Accordance with Special Purpose Frameworks
Contents
Paragraph(s)
Introduction
Scope of this SA ...................................................................................................... 1-3
Effective Date ............................................................................................................ 4
Objective .................................................................................................................. 5
Definitions ............................................................................................................. 6-7
Requirements
Considerations When Accepting the Engagement ..................................................... 8
Considerations When Planning and Performing the Audit .................................... 9-10
Forming an Opinion and Reporting Considerations ............................................. 11-14
Application and Other Explanatory Material
Special Purpose Frameworks ............................................................................ A1-A4
Considerations When Accepting the Engagement ............................................. A5-A8
Considerations When Planning and Performing the Audit ................................ A9-A12
Forming an Opinion and Reporting Considerations ........................................ A13-A21
Material Modifications vis-a-vis ISA 800(Revised), “Special Considerations—Audits of
Financial Statements Prepared in Accordance with Special Purpose Frameworks”
Appendix: Illustrations of Independent Auditor’s Reports on Special Purpose
Financial Statements
Standard on Auditing (SA) 800(Revised), “Special Considerations—Audits of
Financial Statements Prepared in Accordance with Special Purpose Frameworks”
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”.
1
Introduction
Scope of this SA
1. The Standards on Auditing (SAs) in the 100-700 series apply to an audit of
financial statements. This SA deals with special considerations in the application of
those SAs to an audit of financial statements prepared in accordance with a special
purpose framework.
2. This SA is written in the context of a complete set of financial statements
prepared in accordance with a special purpose framework. SA 805(Revised)1, deals
with special considerations relevant to an audit of a single financial statement or of a
specific element, account or item of a financial statement.
3. This SA does not override the requirements of the other SAs; nor does it
purport to deal with all special considerations that may be relevant in the
circumstances of the engagement.
Effective Date
4. This SA is effective for audits of financial statements for periods beginning on or
after April 1, 2024.
Objective
5. The objective of the auditor, when applying SAs in an audit of financial
statements prepared in accordance with a special purpose framework, is to address
appropriately the special considerations that are relevant to:
(a) The acceptance of the engagement;
(b) The planning and performance of that engagement; and
(c) Forming an opinion and reporting on the financial statements.
Definitions
6. For purposes of the SAs, the following terms have the meanings attributed
below:
(a) Special purpose financial statements – Financial statements prepared in
accordance with a special purpose framework. (Ref: Para. A4)
(b) Special purpose framework – A financial reporting framework designed to meet
the financial information needs of specific users. The financial reporting
framework may be a fair presentation framework or a compliance framework2.
(Ref: Para. A1-A4)
7. Reference to “financial statements” in this SA means “a complete set of special
purpose financial statements” including the related notes. The related notes
ordinarily comprise a summary of significant accounting policies and other
explanatory information. The requirements of the applicable financial reporting
1 SA 805(Revised), “Special Considerations—Audits of Single Financial Statements and Specific Elements,
Accounts or Items of a Financial Statement”.
2 SA 200, paragraph 13(a).
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framework determine the form and content of the financial statements, and what
constitutes a complete set of financial statements.
Requirements
Considerations When Accepting the Engagement
Acceptability of the Financial Reporting Framework
8. SA 210 requires the auditor to determine the acceptability of the financial
reporting framework applied in the preparation of the financial statements3. In an
audit of special purpose financial statements, the auditor shall obtain an
understanding of: (Ref: Para. A5-A8)
(a) The purpose for which the financial statements are prepared;
(b) The intended users; and
(c) The steps taken by management to determine that the applicable financial
reporting framework is acceptable in the circumstances.
Considerations When Planning and Performing the Audit
9. SA 200 requires the auditor to comply with all SAs relevant to the audit4. In
planning and performing an audit of special purpose financial statements, the auditor
shall determine whether application of the SAs requires special consideration in the
circumstances of the engagement. (Ref: Para. A9-A12)
10. SA 315 requires the auditor to obtain an understanding of the entity’s selection
and application of accounting policies5. In the case of financial statements prepared
in accordance with the provisions of a contract, the auditor shall obtain an
understanding of any significant interpretations of the contract that management
made in the preparation of those financial statements. An interpretation is significant
when adoption of another reasonable interpretation would have produced a material
difference in the information presented in the financial statements.
Forming an Opinion and Reporting Considerations
11. When forming an opinion and reporting on special purpose financial statements,
the auditor shall apply the requirements in SA 700(Revised)6. (Ref: Para. A13–A19)
Description of the Applicable Financial Reporting Framework
12. SA 700(Revised) requires the auditor to evaluate whether the financial statements
adequately refer to or describe the applicable financial reporting framework7. In the
case of financial statements prepared in accordance with the provisions of a
contract, the auditor shall evaluate whether the financial statements adequately
3
SA 210, “Agreeing the Terms of Audit Engagements”, paragraph 6(a).
4 SA 200, paragraph 18.
5 SA 315, “Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and
Its Environment”, paragraph 11(c).
6 SA 700(Revised), “Forming an Opinion and Reporting on Financial Statements”.
7 SA 700(Revised), paragraph 15.
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describe any significant interpretations of the contract on which the financial
statements are based.
13. SA 700(Revised) deals with the form and content of the auditor’s report,
including the specific ordering of certain elements. In the case of an auditor’s report
on special purpose financial statements:
(a) The auditor’s report shall also describe the purpose for which the financial
statements are prepared and, if necessary, the intended users, or refer to a note
in the special purpose financial statements that contains that information; and
(b) If management has a choice of financial reporting frameworks in the preparation
of such financial statements, the explanation of management’s responsibility for
the financial statements shall also make reference to its responsibility for
determining that the applicable financial reporting framework is acceptable in the
circumstances.
Alerting Readers that the Financial Statements Are Prepared in Accordance
with a Special Purpose Framework
14. The auditor’s report on special purpose financial statements shall include an
Emphasis of Matter paragraph alerting users of the auditor’s report that the financial
statements are prepared in accordance with a special purpose framework and that,
as a result, the financial statements may not be suitable for another purpose. (Ref:
Para. A20 – A21)
***
Application and Other Explanatory Material
Special Purpose Frameworks (Ref: Para. 6)
A1. Examples of special purpose frameworks are:
• The cash basis of accounting and also cash flow information that an entity may
be required to prepare for creditors;
• The financial reporting provisions established by a regulator to meet the
requirements of that regulator; or
• The financial reporting provisions of a contract, such as a bond indenture, a loan
agreement, or a project grant.
A2. There may be circumstances where a special purpose framework is based on a
financial reporting framework established by an authorised or recognised standards
setting organization or by law or regulation, but does not comply with all the
requirements of that framework. An example is a contract that requires financial
statements to be prepared in accordance with most, but not all, of the Accounting
Standards issued by ICAI or the Accounting Standards notified under the Companies
Act, 2013. When this is acceptable in the circumstances of the engagement, it is
inappropriate for the description of the applicable financial reporting framework in the
special purpose financial statements to imply full compliance with the financial
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reporting framework established by the authorised or recognized standards setting
organization or by law or regulation. In the above example of the contract, the
description of the applicable financial reporting framework may refer to the financial
reporting provisions of the contract, rather than make any reference to the
Accounting Standards issued by ICAI or the Accounting Standards notified under the
Companies Act, 2013.
A3. In the circumstances described in paragraph A2, the special purpose
framework may not be a fair presentation framework even if the financial reporting
framework on which it is based is a fair presentation framework. This is because the
special purpose framework may not comply with all the requirements of the
financial reporting framework established by the authorized or recognized standards
setting organization or by law or regulation that are necessary to achieve fair
presentation of the financial statements.
A4. Financial statements prepared in accordance with a special purpose
framework may be the only financial statements an entity prepares. In such
circumstances, those financial statements may be used by users other than those
for whom the financial reporting framework is designed. Despite the broad
distribution of the financial statements in those circumstances, the financial
statements are still considered to be special purpose financial statements for
purposes of the SAs. The requirements in paragraphs 13-14 are designed to avoid
misunderstandings about the purpose for which the financial statements are
prepared.
Considerations When Accepting the Engagement
Acceptability of the Financial Reporting Framework (Ref: Para. 8)
A5. In the case of special purpose financial statements, the financial information
needs of the intended users are a key factor in determining the acceptability of the
financial reporting framework applied in the preparation of the financial statements.
A6. The applicable financial reporting framework may encompass the financial
reporting standards established by an organization that is authorized or recognized
to promulgate standards for special purpose financial statements. In that case, those
standards will be presumed acceptable for that purpose if the organization follows an
established and transparent process involving deliberation and consideration of the
views of relevant stakeholders. Some law(s) or regulation(s) may prescribe the
financial reporting framework to be used by management in the preparation of
special purpose financial statements for a certain type of entity. For example, a
regulator may establish financial reporting provisions to meet the requirements of that
regulator. In the absence of indications to the contrary, such a financial reporting
framework is presumed acceptable for special purpose financial statements prepared
by such entity.
A7. Where the financial reporting standards referred to in paragraph A6 are
supplemented by legislative or regulatory requirements, SA 210 requires the auditor
to determine whether any conflicts between the financial reporting standards and the
additional requirements exist, and prescribes actions to be taken by the auditor if
such conflicts exist8.
8 SA 210, paragraph 18.
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A8. The applicable financial reporting framework may encompass the financial
reporting provisions of a contract, or sources other than those described in
paragraphs A6 and A7. In that case, the acceptability of the financial reporting
framework in the circumstances of the engagement is determined by considering
whether the framework exhibits attributes normally exhibited by acceptable financial
reporting frameworks as described in Appendix 2 of SA 210. In the case of a
special purpose framework, the relative importance to a particular engagement of
each of the attributes normally exhibited by acceptable financial reporting
frameworks is a matter of professional judgment. For example, for purposes of
establishing the value of net assets of an entity at the date of its sale, the vendor and
the purchaser may have agreed that very prudent estimates of allowances for
uncollectible accounts receivable are appropriate for their needs, even though such
financial information is not neutral when compared with financial information
prepared in accordance with a general purpose framework.
Considerations When Planning and Performing the Audit (Ref: Para. 9)
A9. SA 200 requires the auditor to comply with (a) relevant ethical requirements,
including those pertaining to independence, relating to financial statement audit
engagements, and (b) all SAs relevant to the audit. It also requires the auditor to
comply with each requirement of an SA unless, in the circumstances of the audit,
the entire SA is not relevant or the requirement is not relevant because it is
conditional and the condition does not exist. In exceptional circumstances, the
auditor may judge it necessary to depart from a relevant requirement in an SA by
performing alternative audit procedures to achieve the aim of that requirement9.
A10. Application of some of the requirements of the SAs in an audit of special
purpose financial statements may require special consideration by the auditor. For
example, in SA 320, judgments about matters that are material to users of the
financial statements are based on a consideration of the common financial
information needs of users as a group10. In the case of an audit of special purpose
financial statements, however, those judgments are based on a consideration of the
financial information needs of the intended users.
A11. In the case of special purpose financial statements, such as those
prepared in accordance with the requirements of a contract, management may
agree with the intended users on a threshold below which misstatements identified
during the audit will not be corrected or otherwise adjusted. The existence of such
a threshold does not relieve the auditor from the requirement to determine materiality
in accordance with SA 320 for purposes of planning and performing the audit of the
special purpose financial statements.
A12. SA 260(Revised) requires the auditor to determine the appropriate persons
within the entity’s governance structure with whom to communicate11. SA
260(Revised) notes that, in some cases, all of those charged with governance are
involved in managing the entity, and the application of the communication
requirements is modified to recognise this position.12 When a complete set of general
9 SA 200, paragraphs 14, 18 and 22-23.
10 SA 320, “Materiality in Planning and Performing an Audit”, paragraph 2.
11 SA 260(Revised), “Communication with Those charged with Governance”, paragraph 11.
12 SA 260(Revised), paragraph A8.
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purpose financial statements is also prepared by the entity, those person(s)
responsible for the oversight of the preparation of the special purpose financial
statements may not be the same as those charged with governance responsible for
the oversight of the preparation of the general purpose financial statements.
Forming an Opinion and Reporting Considerations (Ref: Para. 11)
A13. The Appendix to this SA contains illustrations of independent auditor’s reports
on special purpose financial statements. Other illustrations of auditor’s report may be
relevant to reporting on special purpose financial statements (see for example, the
Appendices to SA 700(Revised), SA 705(Revised)13, SA 570(Revised)14, SA
720(Revised)15, and SA 706(Revised)16.
Application of SA 700(Revised) When Reporting on Special Purpose Financial
Statements
A14. Paragraph 11 of this SA explains that the auditor is required to apply SA
700(Revised) when forming an opinion and reporting on special purpose financial
statements. In doing so, the auditor is also required to apply the reporting
requirements in other SAs and may find the special considerations addressed in
paragraphs A15-A19 below helpful.
Going Concern
A15. Special purpose financial statements may or may not be prepared in
accordance with a financial reporting framework for which the going concern basis of
accounting is relevant.17 Depending on the applicable financial reporting framework
used in the preparation of the special purpose financial statements, the description in
the auditor’s report of management’s responsibilities18 relating to going concern may
need to be adapted, as necessary. The description in the auditor’s report of the
auditor’s responsibilities19 may also need to be adapted as necessary depending on
how SA 570(Revised) applies in the circumstances of the engagement.
Key Audit Matters
A16. SA 700(Revised) requires the auditor to communicate key audit matters in
accordance with SA 70120 for audits of complete sets of general purpose financial
statements of listed entities. For audits of special purpose financial statements, SA
701 applies only when communication of key audit matters in the auditor’s report on
13 SA 705(Revised), “Modifications to the Opinion in the Independent Auditor’s Report”.
14 SA 570(Revised), “Going Concern”.
15 SA 720(Revised), “The Auditor’s Responsibilities Relating to Other Information”.
16 SA 706(Revised), “Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s
Report”.
17 See SA 570(Revised), “Going Concern”, paragraph 2.
18 See SA 700(Revised), paragraph 34(b) and A43.
19 See SA 700(Revised), paragraph 39(b)(iv).
20 SA 701, “Communicating Key Audit Matters in the Independent Auditor’s Report”.
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the special purpose financial statements is required by law or regulation 21. When
key audit matters are communicated in the auditor’s report on special purpose
financial statements, SA 701 applies in its entirety.22
Other Information
A17. SA 720(Revised) deals with the auditor’s responsibilities relating to other
information. In the context of this SA, reports containing or accompanying the special
purpose financial statements – the purpose of which is to provide owners (or similar
stakeholders) with information on matters presented in special purpose financial
statements – are considered to be annual reports for the purposes of SA
720(Revised). In the case of financial statements prepared using a special purpose
framework, the term “similar stakeholders” includes the specific users whose
financial information needs are met by the design of the special purpose framework
used to prepare the special purpose financial statements. When the auditor
determines that the entity plans to issue such a report, the requirements of SA
720(Revised) apply to the audit of the special purpose financial statements.
Signature of the Auditor
A18. The auditor’s report shall be signed. The report is signed by the auditor (i.e.
the engagement partner) in his personal name. Where the firm is appointed as the
auditor, the report is signed in the personal name of the auditor and in the name of
the audit firm. The partner/proprietor signing the auditor’s report also needs to
mention the membership number assigned by the Institute of Chartered Accountants
of India. They also include the registration number of the firm, wherever applicable,
as allotted by ICAI, in the auditor’s reports signed by them23.
Inclusion of a Reference to the Auditor’s Report on the Complete Set of General
Purpose Financial Statements
A19. The auditor may deem it appropriate to refer, in an Other Matter paragraph
in the auditor’s report on the special purpose financial statements, to the auditor’s
report on the complete set of general purpose financial statements or to matter(s)
reported therein (See SA 706(Revised)24). For example, the auditor may consider it
appropriate to refer in the auditor’s report on the special purpose financial
statements to a Material Uncertainty Related to Going Concern section included in
the auditor’s report on the complete set of general purpose financial statements.
Alerting Readers that the Financial Statements Are Prepared in Accordance
with a Special Purpose Framework (Ref: Para. 14)
A20. The special purpose financial statements may be used for purposes other
than those for which they were intended. For example, a regulator may require
certain entities to place the special purpose financial statements on public record. To
avoid misunderstandings, the auditor alerts users of the auditor’s report by including
21 Presently, laws and regulations do not require reporting of key audit matters in accordance with SA 701 in case
of special purpose financial statements.
22 See SA 700(Revised), paragraph 31.
23 See SA 700(Revised), paragraph 46.
24 See SA 706(Revised), paragraphs 10-11.
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an Emphasis of Matter paragraph explaining that the financial statements are
prepared in accordance with a special purpose framework and, therefore, may not be
suitable for another purpose. SA 706(Revised) requires this paragraph to be included
within a separate section of the auditor’s report with an appropriate heading that
includes the term “Emphasis of Matter”.25
Restriction on Distribution or Use (Ref: Para. 14)
A21. In addition to the alert required by paragraph 14, the auditor may consider it
appropriate to indicate that the auditor’s report is intended solely for the specific
users. Depending on the applicable law or regulation, this may be achieved by
restricting the distribution or use of the auditor’s report. In these circumstances, the
paragraph referred to in paragraph 14 may be expanded to include these other
matters, and the heading modified accordingly.
Material Modifications vis-a-vis ISA 800(Revised), “Special
Considerations—Audits of Financial Statements Prepared in
Accordance with Special Purpose Frameworks”
Deletion
Paragraph A1 of ISA 800(Revised) [paragraph A1 of SA 800(Revised)] deals with the
examples of special purpose frameworks, which also includes the example of “a tax
basis of accounting for a set of financial statements that accompany an entity’s tax
return”. Since in India, financial statements prepared on accrual basis of accounting
as per applicable Indian GAAP for filing with income tax authorities are considered to
be general purpose financial statements, the example, “A tax basis of accounting for
a set of financial statements that accompany an entity’s tax return” has been deleted.
25 See paragraph 9(a) of SA 706(Revised).
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Appendix26
(Ref: Para. A13)
Illustrations of Independent Auditor’s Reports on Special
Purpose Financial Statements
Illustration 1: An auditor’s report on a complete set of financial statements of an
entity other than a listed entity, prepared in accordance with the financial reporting
provisions of a contract (for purposes of this illustration, a compliance framework).
Illustration 2: An auditor’s report on a complete set of financial statements prepared
in accordance with the financial reporting provisions established by a regulator (for
purposes of this illustration, a fair presentation framework).
26 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.
10
Illustration 1: An auditor’s report on a complete set of financial statements of
an entity other than a listed entity, prepared in accordance with the financial
reporting provisions of a contract (for purposes of this illustration, a
compliance framework).
For purposes of this illustration, the following circumstances are assumed:
• The financial statements have been prepared by management of the entity in
accordance with the financial reporting provisions of a contract (i.e., a special
purpose framework). Management does not have a choice of financial reporting
frameworks.
• The applicable financial reporting framework is a compliance framework.
• An auditor’s report on the complete set of general purpose financial statements
was not issued.
• 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.
• 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 entity’s ability to continue as a going concern in accordance with SA
570(Revised).
• Distribution and use of the auditor’s report are restricted.
• The auditor has determined that there is no other information (i.e., the
requirements of SA 720(Revised) do not apply).
• Those responsible for oversight of the financial statements do not differ from those
responsible for the preparation of the financial statements.
• The auditor has no other reporting responsibilities required under local law.
INDEPENDENT AUDITOR’S REPORT
[Appropriate Addressee]
Opinion
We have audited the financial statements of ABC Company Limited (the Company),
which comprise the balance sheet as at March 31, 20XX, and the statement of profit
and loss, and the statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies.
In our opinion, and to the best of our information and according to the explanations
given to us, the accompanying financial statements of the Company for the year
ended March 31, 20XX are prepared in all material respects in accordance with the
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financial reporting provisions of section/ clause Z of the contract dated July 1, 20XX
between the Company and DEF Company Limited (“the contract”).
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.
Emphasis of Matter - Basis of Accounting and Restriction on Distribution and
Use
We draw attention to Note X to the financial statements, which describes the basis
of accounting. The financial statements are prepared to assist the Company in
complying with the financial reporting provisions of the contract referred to above. As
a result, the financial statements may not be suitable for another purpose. Our report
is intended solely for the Company and DEF Company Limited and should not be
distributed to or used by parties other than the Company or DEF Company Limited
Our opinion is not modified in respect of this matter.
Management’s Responsibility for the Financial Statements
The Company’s Board of Directors is responsible for the preparation of the financial
statements in accordance with the financial reporting provisions of section/ clause Z
of the contract; this includes the design, implementation and maintenance of internal
control relevant to the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is also responsible for
assessing the Company’s ability to continue as a going concern, disclosing, as
applicable, matters relating to going concern and using the going concern basis of
accounting unless the Board of Directors either intends to liquidate the Company or
to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company’s financial
reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with SAs will always detect a material misstatement when
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it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Paragraph 41(b) of SA 700(Revised) explains that the shaded material below can be
located in an Appendix to the auditor’s report. Paragraph 41(c) of SA 700(Revised)
explains that when law, regulation or applicable auditing standards expressly permit,
reference can be made to a website of an appropriate authority that contains the
description of the auditor’s responsibilities, rather than including this material in the
auditor’s report, provided that the description on the website addresses, and is not
inconsistent with, the description of the auditor’s responsibilities below.
As part of an audit in accordance with the Standards on Auditing, we exercise
professional judgement and maintain professional skepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company’s internal
control27.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by
management.
• Conclude on the appropriateness of management’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company to cease to
continue as a going concern.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our
audit.
27 This sentence would be modified, as appropriate in circumstances when the auditor also has responsibility to
issue an opinion on the effectiveness of internal control in conjunction with an audit of the financial statements.
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We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, actions taken to
eliminate threats or safeguards applied.
For XYZ and Co.
Chartered Accountants
Firm’s Registration Number
Signature
(Name of the Member Signing the Auditor’s Report)
(Designation28)
Membership Number
UDIN
Place of Signature
Date
28 Partner or Proprietor, as the case may be.
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Illustration 2: An auditor’s report on a complete set of financial statements
prepared in accordance with the financial reporting provisions established by
a regulator (for purposes of this illustration, a fair presentation framework).
For purposes of this illustration, the following circumstances are assumed:
• Audit of a complete set of financial statements that have been prepared by
management of the entity in accordance with the financial reporting provisions
established by a regulator (i.e., a special purpose framework) to meet the
requirements of that regulator. Management does not have a choice of financial
reporting frameworks.
• The applicable financial reporting framework is a fair presentation framework.
• 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.
• 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 exists related to events or conditions that may cast significant doubt
on the entity’s ability to continue as a going concern in accordance with SA
570(Revised). The disclosure of material uncertainty in the financial statements
is adequate.
• Distribution or use of the auditor’s report is not restricted.
• The auditor has determined that there is no other information (i.e., the
requirements of SA 720(Revised) do not apply).
• Those responsible for oversight of the financial statements do not differ from those
responsible for the preparation of the financial statements.
• The auditor has no other reporting responsibilities required under local law.
INDEPENDENT AUDITOR’S REPORT
[Appropriate Addressee]
Opinion
We have audited the financial statements of ABC Company Limited (the
Company), which comprise the balance sheet as at March 31, 20XX, and the
statement of profit and loss, and the cash flow statement for the year then ended,
and notes to the financial statements, including a summary of significant accounting
policies.
In our opinion, and to the best of our information and according to the explanations
given to us, the accompanying financial statements give a true and fair view of the
state of affairs of the Company as at March 31, 20XX, and of its results of
operations and its cash flows for the year then ended in accordance with the
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financial reporting provisions of Section Y of Regulation Z.
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.
Emphasis of Matter - Basis of Accounting
We draw attention to Note X to the financial statements, which describes the basis
of accounting. The financial statements are prepared to assist the Company to meet
the requirements of Regulator DEF. As a result, the financial statements may not be
suitable for another purpose. Our opinion is not modified in respect of this matter.
Material Uncertainty Related to Going Concern
We draw attention to Note XX in the financial statements, which indicates that the
Company incurred a net loss of Rs. ZZZ during the year ended March 31, 20XX
and, as of that date, the Company’s current liabilities exceeded its total assets by
Rs. YYY. As stated in Note XX, these events or conditions, along with other matters
as set forth in Note XX, indicate that a material uncertainty exists that may cast
significant doubt on the Company’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Other Matter
The Company has prepared a separate set of financial statements for the year ended
March 31, 20XX in accordance with the Accounting Standards notified under the
Companies Act, 2013 on which we issued a separate auditor’s report to the
members of the Company dated June 30, 20XX.
Management’s Responsibility for the Financial Statements
The Board of Directors of the Company is responsible for the preparation and
presentation of the financial statements that give a true and fair view of the state of
affairs, results of operations and cash flows of the Company in accordance with the
financial reporting provisions of Section Y of Regulation Z; this includes the design,
implementation and maintenance of internal control relevant to the preparation and
presentation of the financial statements that give a true and fair view and are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is also responsible for
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assessing the Company’s ability to continue as a going concern, disclosing, as
applicable, matters relating to going concern and using the going concern basis of
accounting unless the Board of Directors either intends to liquidate the Company or
to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company’s financial
reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with SAs will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Paragraph 41(b) of SA 700(Revised) explains that the shaded material below can be
located in an Appendix to the auditor’s report. Paragraph 41(c) of SA 700(Revised)
explains that when law, regulation or applicable auditing standards expressly permit,
reference can be made to a website of an appropriate authority that contains the
description of the auditor’s responsibilities, rather than including this material in the
auditor’s report, provided that the description on the website addresses, and is not
inconsistent with, the description of the auditor’s responsibilities below.
As part of an audit in accordance with the Standards on Auditing, we exercise
professional judgment and maintain professional skepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company’s internal
control29.
• Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a
29 This sentence would be modified, as appropriate in circumstances when the auditor also has responsibility to
issue an opinion on the effectiveness of internal control in conjunction with an audit of the financial statements.
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material uncertainty exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, actions taken to
eliminate threats or safeguards applied.
For XYZ and Co.
Chartered Accountants
Firm’s Registration Number
Signature
(Name of the Member Signing the Auditor’s Report)
(Designation30)
Membership Number
UDIN
Place of Signature
Date
30 Partner or Proprietor, as the case may be.
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