SA 805 Single FS
Standard on Auditing (SA) 805(Revised)
Special Considerations - Audits of Single Financial Statements and
Specific Elements, Accounts or Items of a Financial Statement
Contents
Paragraph(s)
Introduction
Scope of this SA ..................................................................................................... 1-3
Effective Date ............................................................................................................. 4
Objective .................................................................................................................. 5
Definitions ................................................................................................................. 6
Requirements
Considerations When Accepting the Engagement ................................................. 7-9
Considerations When Planning and Performing the Audit ....................................... 10
Forming an Opinion and Reporting Considerations .......................................... 11-17
Application and Other Explanatory Material
Scope of this SA ................................................................................................ A1-A3
Considerations When Accepting the Engagement ............................................ A4-A8
Considerations When Planning and Performing the Audit ............................... A9-A14
Forming an Opinion and Reporting Considerations ..................................... A15-A26
Material Modifications vis-a-vis ISA 805(Revised), “Special Considerations - Audits
of Single Financial Statements and Specific Elements, Accounts or Items of a
Financial Statement”
Appendix 1: Examples of Specific Elements, Accounts or Items of a Financial
Statement
Appendix 2: Illustrations of Independent Auditor’s Reports on a Single Financial
Statement and on a Specific Element of a Financial Statement
Standard on Auditing (SA) 805(Revised), “Special Considerations—Audits of Single
Financial Statements and Specific Elements, Accounts or Items of a Financial
Statement” 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”.
Introduction
Scope of this SA
1. The Standards on Auditing (SAs) in the 100-700 series apply to an audit of
financial statements and are to be adapted as necessary in the circumstances when
applied to audits of other historical financial information. This SA deals with special
considerations in the application of those SAs to an audit of a single financial
statement or of a specific element, account or item of a financial statement. The
single financial statement or the specific element, account or item of a financial
statement may be prepared in accordance with a general or special purpose
framework. If prepared in accordance with a special purpose framework, SA
800(Revised)1 also applies to the audit. (Ref: Para. A1-A3)
2. This SA does not apply to the report of a component auditor, issued as a result
of work performed on the financial information of a component at the request of a
principal auditor for purposes of an audit of consolidated financial statements2.
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 single financial statements or of specific
elements, accounts or items for periods beginning on or after April 1, 2024. In the
case of audits of single financial statements or of specific elements, accounts or
items of a financial statement prepared as at a specific date, this SA is effective for
audits of such information prepared as at a date on or after April 1, 2024.
Objective
5. The objective of the auditor, when applying SAs in an audit of a single financial
statement or of a specific element, account or item of a financial statement, 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 single financial statement or on the
specific element, account or item of a financial statement.
Definitions
6. For purposes of this SA, reference to:
(a) “Element of a financial statement” or “element” means an “element, account or
item of a financial statement”;
(b) “Financial Reporting Standards” includes:
1 SA 800(Revised), “Special Considerations—Audits of Financial Statements Prepared in Accordance with
Special Purpose Frameworks”.
2 SA 600, “Using the Work of Another Auditor”.
2
• The Accounting Standards issued by the Institute of Chartered Accountants of
India (ICAI)3; or
• Accounting Standards notified under the Companies Act, 2013; or
• The International Financial Reporting Standards (IFRSs) issued by the
International Accounting Standards Board; or
• The International Public Sector Accounting Standards (IPSASs) issued by the
International Public Sector Accounting Standards Board; or
• Any other Accounting Standards as may be applicable to the entity.
(c) A single financial statement (for example, a cash flow statement) or a specific
element of a financial statement (for example, cash and bank balances) includes
the related notes. The related notes ordinarily comprise a summary of significant
accounting policies and other explanatory information relevant to the financial
statement or to the element. (Ref: Para. A2)
Requirements
Considerations When Accepting the Engagement
Application of SAs
7. SA 200 requires the auditor to comply with all SAs relevant to the audit4. In the
case of an audit of a single financial statement or of a specific element of a financial
statement, this requirement applies irrespective of whether the auditor is also
engaged to audit the entity’s complete set of financial statements. If the auditor is not
also engaged to audit the entity’s complete set of financial statements, the auditor
shall determine whether the audit of a single financial statement or of a specific
element of those financial statements in accordance with SAs is practicable. (Ref:
Para. A4-A5)
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 statements5. In the
case of an audit of a single financial statement or of a specific element of a financial
statement, this shall include whether application of the financial reporting framework
will result in a presentation that provides adequate disclosures to enable the
intended users to understand the information conveyed in the financial statement or
the element, and the effect of material transactions and events on the information
conveyed in the financial statement or the element. (Ref: Para. A6)
Form of Opinion
9. SA 210 requires that the agreed terms of the audit engagement include the
expected form of any reports to be issued by the auditor6. In the case of an audit of a
single financial statement or of a specific element of a financial statement, the
auditor shall consider whether the expected form of opinion is appropriate in the
circumstances. (Ref: Para. A7-A8)
3 For example, the Accounting Standards for Local Bodies issued by ICAI.
4 SA 200, paragraph 18.
5 SA 210, “Agreeing the Terms of Audit Engagements”, paragraph 6(a).
6 SA 210, paragraph 10(e).
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Considerations When Planning and Performing the Audit
10. SA 200 states that SAs are written in the context of an audit of financial
statements; they are to be adapted as necessary in the circumstances when applied
to audits of other historical financial information.7,8 In planning and performing the
audit of a single financial statement or of a specific element of a financial statement,
the auditor shall adapt all SAs relevant to the audit as necessary in the
circumstances of the engagement. (Ref: Para. A9-A14)
Forming an Opinion and Reporting Considerations
11. When forming an opinion and reporting on a single financial statement or on a
specific element of a financial statement, the auditor shall apply the requirements in
SA 700(Revised)9, and, when applicable, SA 800(Revised) adapted as necessary in
the circumstances of the engagement. (Ref: Para. A15 – A21)
Reporting on the Entity’s Complete Set of Financial Statements and on a
Single Financial Statement or on a Specific Element of Those Financial
Statements
12. If the auditor undertakes an engagement to report on a single financial statement
or on a specific element of a financial statement in conjunction with an engagement
to audit the entity’s complete set of financial statements, the auditor shall express a
separate opinion for each engagement.
13. The audited single financial statement or the audited specific element of a
financial statement may be published together with the entity’s audited complete set
of financial statements. If the auditor concludes that the presentation of the 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. Subject to paragraphs 15 and 16, the
auditor shall also differentiate the opinion on the single financial statement or on the
specific element of a financial statement from the opinion on the complete set of
financial statements. 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.
Considering the Implications of Certain Matters Included in the Auditor’s Report on
the Entity’s Complete Set of Financial Statements for the Audit of the Single
Financial Statement or the Specific Element of a Financial Statement and for the
Auditor’s Report Thereon
14. If the auditor’s report on an entity’s complete set of financial statements includes:
(a) A modified opinion in accordance with SA 705(Revised)10;
(b) An Emphasis of Matter paragraph or an Other Matter paragraph in accordance
with SA 706(Revised)11;
7 SA 200, paragraph 2.
8 SA 200, paragraph 13(f), explains that the term “financial statements” ordinarily refers to a complete set of
financial statements as determined by the requirements of the applicable financial reporting framework.
9 SA 700(Revised), “Forming an Opinion and Reporting on Financial Statements”.
10 SA 705(Revised), “Modifications to the Opinion in the Independent Auditor’s Report”.
11 SA 706(Revised), “Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s
Report”.
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(c) A Material Uncertainty Related to Going Concern section in accordance with SA
570(Revised);12 or
(d) A statement that describes an uncorrected material misstatement of the other
information in accordance with SA 720(Revised). 13
the auditor shall consider the implications, if any, that these matters, may have for
the audit of the single financial statement or of the specific element of a financial
statement and for the auditor’s report thereon. (Ref: Para. A22-A25)
Adverse Opinion or Disclaimer of Opinion in the Auditor’s Report on the
Entity’s Complete Set of Financial Statements
15. 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,
SA 705(Revised) does not permit the auditor to include in the same auditor’s report
an unmodified opinion on a single financial statement that forms part of those
financial statements or on a specific element of those financial statements14. 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.
(Ref: Para. A26)
16. 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, in the context of a separate audit of a specific element of those financial
statements, the auditor nevertheless considers it appropriate to express an
unmodified opinion on that element, the auditor shall only do so if:
(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 element does not constitute a major portion of the entity’s complete set of
financial statements.
17. The auditor shall not express an unmodified opinion on a single financial
statement of a complete set of financial statements if the auditor has expressed an
adverse opinion or disclaimed an opinion on the complete set of financial statements
as a whole. This is the case even if the auditor’s report on the single financial
statement is not published together with the auditor’s report containing the adverse
opinion or disclaimer of opinion. This is because a single financial statement is
deemed to constitute a major portion of those financial statements.
***
Application and Other Explanatory Material
Scope of this SA (Ref: Para.1, 6(c))
A1. SA 200 defines the term “historical financial information” as information
expressed in financial terms in relation to a particular entity, derived primarily from
12 SA 570(Revised), “Going Concern”, paragraph 22.
13 SA 720(Revised), “The Auditor’s Responsibilities Relating to Other Information”, paragraph 22(e)(ii).
14 SA 705(Revised), paragraph 15.
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that entity’s accounting system, about economic events occurring in past time
periods or about economic conditions or circumstances at points in time in the past15.
A2. SA 200 defines the term “financial statements” as a structured representation of
historical financial information, including related notes, intended to communicate an
entity’s economic resources or obligations at a point in time or the changes therein
for a period of time in accordance with a financial reporting framework. The related
notes ordinarily comprise a summary of significant accounting policies and other
explanatory information. The term can relate to a complete set of financial
statements, but can also refer to a single financial statement16, for example, a balance
sheet, or a statement of revenues and expenses, and related explanatory notes.
A3. SAs are written in the context of an audit of financial statements17; they are to be
adapted as necessary in the circumstances when applied to an audit of other
historical financial information, such as a single financial statement or a specific
element of a financial statement. This SA assists in this regard. (Appendix 1 lists
examples of such other historical financial information.)
Considerations When Accepting the Engagement
Application of SAs (Ref: Para. 7)
A4. 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 requirement18.
A5. Compliance with the requirements of SAs relevant to the audit of a single
financial statement or of a specific element of a financial statement may not be
practicable when the auditor is not also engaged to audit the entity’s complete set of
financial statements. In such cases, the auditor often does not have the same
understanding of the entity and its environment, including its internal control, as an
auditor who also audits the entity’s complete set of financial statements. The auditor
also does not have the audit evidence about the general quality of the accounting
records or other accounting information that would be acquired in an audit of the
entity’s complete set of financial statements. Accordingly, the auditor may need
further evidence to corroborate audit evidence acquired from the accounting records.
In the case of an audit of a specific element of a financial statement, certain SAs
require audit work that may be disproportionate to the element being audited. For
example, although the requirements of SA 570(Revised) are likely to be relevant in
the circumstances of an audit of a schedule of accounts receivable, complying with
those requirements may not be practicable because of the audit effort required. If the
auditor concludes that an audit of a single financial statement or of a specific element
of a financial statement in accordance with SAs may not be practicable, the auditor
15 SA 200, paragraph 13(g).
16 SA 200, paragraph 13(f).
17 SA 200, paragraph 2.
18 SA 200, paragraphs 14, 18 and 22-23.
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may discuss with management whether another type of engagement might be more
practicable.
Acceptability of the Financial Reporting Framework (Ref: Para. 8)
A6. A single financial statement or a specific element of a financial statement may be
prepared in accordance with an applicable financial reporting framework that is
based on a financial reporting framework established by an authorised or recognised
standards setting organisation for the preparation of a complete set of financial
statements (e.g., Financial Reporting Standards). If this is the case, determination of
the acceptability of the applicable framework may involve considering whether that
framework includes all the requirements of the framework on which it is based that
are relevant to the presentation of a single financial statement or of a specific
element of a financial statement that provides adequate disclosures.
Form of Opinion (Ref: Para. 9)
A7. The form of opinion to be expressed by the auditor depends on the applicable
financial reporting framework and any applicable laws or regulations19. In accordance
with SA 700(Revised)20:
(a) When expressing an unmodified opinion on a complete set of financial
statements prepared in accordance with a fair presentation framework, the
auditor’s opinion, unless otherwise required by law or regulation, uses one of the
following phrases:
(i) the financial statements present fairly, in all material respects, in accordance
with [the applicable financial reporting framework]; or
(ii) the financial statements give a true and fair view in accordance with [the
applicable financial reporting framework]; and
(b) When expressing an unmodified opinion on a complete set of financial
statements prepared in accordance with a compliance framework, the auditor’s
opinion states that the financial statements are prepared, in all material respects,
in accordance with [the applicable financial reporting framework].
A8. In the case of a single financial statement or of a specific element of a financial
statement, the applicable financial reporting framework may not explicitly address the
presentation of the financial statement or of the specific element of the financial
statement. This may be the case when the applicable financial reporting framework
is based on a financial reporting framework established by an authorised or
recognised standards setting organization for the preparation of a complete set of
financial statements (e.g., Financial Reporting Standards). The auditor therefore
considers whether the expected form of opinion is appropriate in the light of the
applicable financial reporting framework. Factors that may affect the auditor’s
consideration as to whether to use the phrases “presents fairly, in all material
respects”, or “gives a true and fair view” in the auditor’s opinion include:
• Whether the applicable financial reporting framework is explicitly or implicitly
restricted to the preparation of a complete set of financial statements.
19 SA 200, paragraph 8.
20 SA 700(Revised), paragraphs 25-26.
7
• Whether the single financial statement or the specific element of a financial
statement will:
Comply fully with each of those requirements of the framework relevant to
the particular financial statement or the particular element, and the
presentation of the financial statement or the specific element of a financial
statement include the related disclosures.
If necessary to achieve fair presentation, provide disclosures beyond those
specifically required by the framework or, in exceptional circumstances,
depart from a requirement of the framework.
The auditor’s decision as to the expected form of opinion is a matter of professional
judgment. It may be affected by whether use of the phrases “presents fairly, in all
material respects”, or “gives a true and fair view” in the auditor’s opinion on a single
financial statement or on a specific element of a financial statement prepared in
accordance with a fair presentation framework is generally accepted in the particular
jurisdiction.
Considerations When Planning and Performing the Audit (Ref: Para. 10)
A9. The relevance of each of the SAs requires careful consideration. Even when only
a specific element of a financial statement is the subject of the audit, SAs such as SA
24021, SA 55022 and SA 570(Revised) are, in principle, relevant. This is because the
element could be misstated as a result of fraud, the effect of related party
transactions, or the incorrect application of the going concern basis of accounting
under the applicable financial reporting framework.
A10. SA 260(Revised) requires the auditor to determine the appropriate person(s)
within the entity’s governance structure with whom to communicate.23 SA
260(Revised) notes that, in some cases, all of those charged with governance are
involved in managing the entity, and the application of communication requirements
is modified to recognise this position.24 When complete set of financial statements is
also prepared by the entity, those person(s) responsible for the oversight of the
preparation of the single financial statement or the element may not be the same as
those charged with governance responsible for the oversight of the preparation of
the complete set of financial statements.
A11. Furthermore, SAs are written in the context of an audit of financial
statements; they are to be adapted as necessary in the circumstances when applied
to the audit of a single financial statement or of a specific element of a financial
statement. For example, written representations from management about the
complete set of financial statements would be replaced by written representations
about the presentation of the financial statement or the element in accordance with
the applicable financial reporting framework.
A12. Matters included in the auditor’s report on the complete set of financial
statements may have implications for the audit of a single financial statement or of
an element of a financial statement (see paragraph 14). When planning and
21 SA 240, “The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements”.
22 SA 550, “Related Parties”.
23 SA 260(Revised), “Communication with Those Charged with Governance”, paragraph 11.
24 See SA 260(Revised), paragraphs 10(b), 13, A1 (third bullet), A2 and A8.
8
performing an audit of a single financial statement or a specific element of a financial
statement in conjunction with the audit of the entity’s complete set of financial
statements, the auditor may be able to use audit evidence obtained as part of the
audit of the entity’s complete set of financial statements in the audit of the financial
statement or the element. SAs, however, require the auditor to plan and perform the
audit of the financial statement or the element to obtain sufficient appropriate audit
evidence on which to base the opinion on the financial statement or on the element.
A13. The individual financial statements that comprise a complete set of financial
statements, and many of the specific elements of those financial statements,
including their related notes, are interrelated. Accordingly, when auditing a single
financial statement or a specific element of a financial statement, the auditor may not
be able to consider the financial statement or the element in isolation. Consequently,
the auditor may need to perform procedures in relation to the interrelated items to
meet the objective of the audit.
A14. Furthermore, the materiality determined for a single financial statement or for
a specific element of a financial statement may be lower than the materiality
determined for the entity’s complete set of financial statements; this will affect the
nature, timing and extent of the audit procedures and the evaluation of uncorrected
misstatements.
Forming an Opinion and Reporting Considerations (Ref: Para. 11)
A15. SA 700(Revised) requires the auditor, in forming an opinion, to evaluate
whether the financial statements provide adequate disclosures to enable the
intended users to understand the effect of material transactions and events on the
information conveyed in the financial statements25. In the case of a single financial
statement or of a specific element of a financial statement, it is important that the
financial statement or the element, in view of the requirements of the applicable
financial reporting framework, provides adequate disclosures to enable the intended
users to understand the information conveyed in the financial statement or the
element, and the effect of material transactions and events on the information
conveyed in the financial statement or the element.
A16. Appendix 2 contains illustrations of independent auditor’s reports on a single
financial statement and on a specific element of a financial statement. Other
illustrations of auditor’s reports may be relevant to reporting on a single financial
statement or on a specific element of a financial statement (see, for example, the
Appendices to SA 700(Revised), SA 705(Revised), SA 570(Revised), SA
720(Revised) and SA 706(Revised).
Application of SA 700(Revised) When Reporting on a Single Financial
Statement or on a Specific Element of a Financial Statement
A17. Paragraph 11 of this SA explains that the auditor is required to apply the
requirements in SA 700(Revised), adapted as necessary in the circumstances of the
engagement, when forming an opinion and reporting on a single financial statement
or on a specific element of a financial statement. In doing so, the auditor is also
required to apply the reporting requirements in other SAs, adapted as necessary in
the circumstances of the engagement, and may find the considerations addressed in
25 SA 700(Revised), paragraph 13(e).
9
paragraphs A18–A21 below helpful.
Going Concern
A18. Depending on the applicable financial reporting framework used in the
preparation of the single financial statement or the specific element of a financial
statement, the description in the auditor’s report of management’s responsibilities 26
relating to going concern may need to be adapted, as necessary. The description in
the auditor’s report of the auditor’s responsibilities27 may also need to be adapted as
necessary depending on how SA 570(Revised) applies in the circumstances of the
engagement.
Key Audit Matters
A19. SA 700(Revised) requires the auditor to communicate key audit matters in
accordance with SA 701 for audits of complete sets of general purpose financial
statements of listed entities28.
Other Information
A20. SA 720(Revised) deals with the auditor’s responsibilities relating to other
information. In the context of this SA, reports containing or accompanying the single
financial statement or specific element of a financial statement – the purpose of
which is to provide owners (or similar stakeholders) with information on matters
presented in the single financial statement or the specific element of a financial
statement – are considered to be annual reports for the purposes of SA
720(Revised). 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 single financial
statement or the element.
Signature of the Auditor
A21. 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 them29.
Reporting on the Entity’s Complete Set of Financial Statements and on a Single
Financial Statement or on a Specific Element of a Financial Statement (Ref:
Para: 14)
Considering the Implications of Certain Matters Included in the Auditor’s Report on
the Entity’s Complete Set of Financial Statements for the Audit of the Single Financial
Statement or the Specific Element of a Financial Statement and for the auditor’s
report thereon
A22. Paragraph 14 requires the auditor to consider the implications, if any, of
certain matters included in the auditor’s report on the complete set of financial
26 See SA 700(Revised), paragraph 34(b) and A43.
27 See SA 700(Revised), paragraph 39(b)(iv).
28 See SA 700(Revised), paragraph 30.
29 See SA 700(revised), paragraph 46.
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statements for the audit of the single financial statement or the specific element of a
financial statement and for the auditor’s report thereon. Considering whether a matter
included in the auditor’s report on the complete set of financial statements is relevant
in the context of an engagement to report on a single financial statement or a specific
element of a financial statement involves professional judgment.
A23. Factors that may be relevant in considering those implications include:
• The nature of the matter(s) being described in the auditor’s report on the complete
set of financial statements and the extent to which it relates to what is included in
the single financial statement or a specific element of a financial statement.
• The pervasiveness of the matter(s) described in the auditor’s report on the
complete set of financial statements.
• The nature and extent of the differences between the applicable financial reporting
frameworks.
• The extent of the difference between the period(s) covered by the complete set of
the financial statements compared to the period(s) or dates of the single financial
statement or the element of a financial statement.
• The time elapsed since the date of the auditor’s report on the complete set of the
financial statements.
A24. For example, in the case when there is a qualification of the auditor’s opinion
in relation to accounts receivable in the auditor’s report on the complete set of
financial statements, and the single financial statement includes accounts receivable,
or the specific element of a financial statement relates to accounts receivable, it is
likely that there would be implications for the audit. On the other hand, if the
qualification of the auditor’s opinion on the complete set of financial statements
relates to classification of long term debt, then it is less likely that there would be
implications for an audit of the single financial statement that is the Statement of Profit
and Loss, or if the specific element of the financial statement relates to accounts
receivable.
Inclusion of a reference to the auditor’s report on the complete set of financial
statements
A25. Even when certain matters included in the auditor’s report on the complete
set of financial statements do not have implications for the audit of, or for the
auditor’s report on, the single financial statement or the specific element of a
financial statement, the auditor may deem it appropriate to refer to the matter(s) in an
Other Matter paragraph in an auditor’s report on the single financial statement or on
the specific element of a financial statement (see SA 706(Revised))30. For example,
the auditor may consider it appropriate to refer in the auditor’s report on the single
financial statement or a specific element of the financial statement to a Material
Uncertainty Related to Going Concern section included in the auditor’s report on the
complete set of financial statements.
30 SA 706(Revised), paragraphs 10-11.
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Adverse Opinion or Disclaimer of Opinion in the Auditor’s Report on the
Entity’s Complete Set of Financial Statements (Ref: Para 15)
A26. In the auditor’s report on an entity’s complete set of financial statements, the
expression of a disclaimer of opinion regarding the results of operations and cash
flows, where relevant, and an unmodified opinion regarding the state of affairs is
permitted since the disclaimer of opinion is being issued in respect of the results of
operations and cash flows only and not in respect of the financial statements as a
whole31.
Material Modifications vis-a-vis ISA 805(Revised), “Special
Considerations - Audits of Single Financial Statements and Specific
Elements, Accounts or Items of a Financial Statement”
Addition
Paragraph 6(b) of ISA 805(Revised) [paragraph(6(b) of SA 805(Revised)] provides
the reference of the financial reporting standards. Since in India, financial reporting
standards, can be Accounting Standards issued by the Institute of Chartered
Accountants of India or Accounting Standards notified under the Companies Act,
2013 or any other accounting standards as may be applicable to the entity, these
have been added in the list of reference of financial reporting standards. References
have accordingly been changed.
31 SA 510, Initial Audit Engagements—Opening Balances, paragraph A5, and SA 705(Revised), paragraph A16.
12
Appendix 1
(Ref: Para. A3)
Examples of Specific Elements, Accounts or Items of a
Financial Statement
• Accounts receivable, allowance for doubtful accounts receivable, inventory, the
liability for accrued benefits of a private pension plan, the recorded value of
identified intangible assets, or the liability for “incurred but not reported” claims in
an insurance portfolio, including related notes.
• A schedule of externally managed assets and income of a private pension plan,
including related notes.
• A schedule of net tangible assets, including related notes.
• A schedule of disbursements in relation to a lease property, including
explanatory notes.
• A schedule of profit participation or employee bonuses, including explanatory
notes.
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Appendix 232
(Ref: Para. A16)
Illustrations of Independent Auditor’s Reports on a Single
Financial Statement and on a Specific Element of a Financial
Statement
• Illustration 1: An auditor’s report on a single financial statement of an entity
other than a listed entity prepared in accordance with a general purpose
framework (for purposes of this illustration, a fair presentation framework).
• Illustration 2: An auditor’s report on a single financial statement of an entity
other than a listed entity prepared in accordance with a special purpose
framework (for purposes of this illustration, a fair presentation framework).
• Illustration 3: An auditor’s report on a specific element, account or item of
financial statements of a listed entity prepared in accordance with a special
purpose framework (for purposes of this illustration, a compliance framework).
32 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.
14
Illustration 1: An auditor’s report on a single financial statement of an unlisted
company, prepared in accordance with a general purpose framework (for
purposes of this illustration, a fair presentation framework).
For purposes of this illustrative auditor’s report, the following circumstances are
assumed:
• Audit of a balance sheet (i.e., a single financial statement).
• The balance sheet has been prepared by management of the entity in
accordance with the requirements of the Accounting Standards notified under the
Companies Act, 2013 relevant to preparing a balance sheet.
• The applicable financial reporting framework is a fair presentation framework
designed to meet the common financial information needs of a wide range of
users.
• The terms of the audit engagement reflect the description of management’s
responsibility for the financial statements in SA 210.
• The auditor has determined that it is appropriate to use the phrase “presents a
true and fair view”, in 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 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 the material uncertainty in the single financial
statement is adequate.
• 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 statement do not differ from those
responsible for the preparation of the financial statement.
• The auditor has no other reporting responsibilities required under the law or
regulation in the specific context of this engagement.
INDEPENDENT AUDITOR’S REPORT
[Appropriate Addressee]
Opinion
We have audited the balance sheet of ABC Company Limited (the Company) as at
March 31, 20XX and notes to the balance sheet, including a summary of significant
accounting policies (together “the financial statement”).
In our opinion, and to the best of our information and according to the explanations
given to us, the accompanying financial statement gives a true and fair view of the
state of affairs of the Company as at March 31, 20XX in accordance with those
15
requirements of the Accounting Standards notified under the Companies Act, 2013
relevant to preparing such a financial statement.
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 Statement 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 statement 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.
Material Uncertainty Related to Going Concern
We draw attention to Note 6 in the financial statement, 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 6, these events or conditions, along with other matters as set
forth in Note 6, 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.
Management’s33 Responsibility for the Financial Statement
The Company’s Board of Directors is responsible for the preparation and fair
presentation of the financial statement in accordance with those requirements of the
Accounting Standards notified under the Companies Act, 2013 (“the Act”) relevant to
preparing such a financial statement; this includes the design, implementation and
maintenance of internal control relevant to the preparation and fair presentation of
the financial statement that is free from material misstatement, whether due to fraud
or error.
In preparing the financial statement, the Board of Directors is responsible for
assessing the Company’s ability to continue as a going concern, disclosing, as
applicable, matters related 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 Statement
Our objectives are to obtain reasonable assurance about whether the financial
statement as a whole is free from material misstatement, whether due to fraud or
33 Or other term that is appropriate in the context of the applicable legal framework.
16
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 this financial statement.
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 statement,
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
control34.
• 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 statement 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 statement,
including the disclosures, and whether the financial statement represents the
underlying transactions and events in a manner that achieves fair presentation.
34 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 statement.
17
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)
(Designation35)
Membership Number
UDIN
Place of Signature
Date
35 Partner or Proprietor, as the case may be.
18
Illustration 2: An auditor’s report on a single financial statement of an unlisted
company, prepared in accordance with a special purpose framework (for
purposes of this illustration, a fair presentation framework).
For purposes of this illustrative auditor’s report, the following circumstances are
assumed:
• Audit of a statement of cash receipts and disbursements (i.e., a single financial
statement).
• An auditor’s report on the complete set of financial statements was not issued.
• The financial statement has been prepared by management of the entity in
accordance with the cash receipts and disbursements basis of accounting to
respond to a request for cash flow information received from a creditor.
Management has a choice of financial reporting frameworks.
• The applicable financial reporting framework is a fair presentation framework
designed to meet the financial information needs of specific users36.
• 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 auditor has determined that it is appropriate to use the phrase “presents a
true and fair view” in 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.
• Distribution or use of the auditor’s report is not restricted.
• 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).
• The auditor has determined that there is no other information (i.e., the
requirements of SA 720(Revised) do not apply).
• Management is responsible for the preparation of the financial statement and
oversight of the financial reporting process to prepare this financial statement.
• The auditor has no other reporting responsibilities required under law or
regulation in the specific context of this engagement.
36 SA 800(Revised) contains requirements and guidance on the form and content of financial statements
prepared in accordance with a special purpose framework.
19
INDEPENDENT AUDITOR’S REPORT
[Appropriate Addressee]
Opinion
We have audited the statement of cash receipts and disbursements of ABC
Company Limited (the Company) for the year ended March 31, 20XX and notes to
the statement of cash receipts and disbursements, including a summary of significant
accounting policies (together “the financial statement”).
In our opinion, and to the best of our information and according to the explanations
given to us, the accompanying financial statement presents a true and fair view of
the cash receipts and disbursements of the Company for the year ended March 31,
20XX in accordance with the cash receipts and disbursements basis of accounting
described in Note X.
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 Statement 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 statement 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 statement, which describes the basis of
accounting. The financial statement is prepared to provide information to XYZ
Creditor. As a result, the financial statement may not be suitable for another
purpose. Our opinion is not modified in respect of this matter.
37
Management’s Responsibility for the Financial Statement
The Company’s Board of Directors is responsible for the preparation and fair
presentation of the financial statement in accordance with the cash receipts and
disbursements basis of accounting described in Note X; this includes determining
that the cash receipts and disbursements basis of accounting is an acceptable basis
for the preparation of the financial statement in the circumstances, and the design,
implementation and maintenance of internal control relevant to the preparation and
fair presentation of the financial statement that is free from material misstatement,
whether due to fraud or error.
In preparing the financial statement, the Board of Directors is responsible for
assessing the Company’s ability to continue as a going concern, disclosing, as
37 Or other term that is appropriate in the context of the applicable legal framework.
20
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 Statement
Our objectives are to obtain reasonable assurance about whether the financial
statement as a whole is 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 this financial statement.
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 statement,
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
control38.
• 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
38 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 statement.
21
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 statement 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 statement,
including the disclosures, and whether the financial statement represents 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)
(Designation39)
Membership Number
UDIN
Place of Signature
Date
39 Partner or Proprietor, as the case may be.
22
Illustration 3: An auditor’s report on a specific element of a financial statement
of a listed entity prepared in accordance with a special purpose framework (for
purposes of this illustration, a compliance framework).
For purposes of this illustrative auditor’s report, the following circumstances are
assumed:
• Audit of an accounts receivable schedule (i.e., element, account or item of a
financial statement).
• The financial information has been prepared by management of the entity in
accordance with the financial reporting provisions established by a regulator to
meet the requirements of that regulator. Management does not have a choice of
financial reporting frameworks.
• The applicable financial reporting framework is a compliance framework designed
to meet the financial information needs of specific users40.
• 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.
• Distribution of the auditor’s report is restricted.
• 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).
• 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 statement do not differ from those
responsible for the preparation of the financial statement.
• The auditor has no other reporting responsibilities required under law or regulation
in the specific context of this engagement.
40 SA 800(Revised) contains requirements and guidance on the form and content of financial statements
prepared in accordance with a special purpose framework.
23
INDEPENDENT AUDITOR’S REPORT
[Appropriate Addressee]
Opinion
We have audited the Accounts Receivable Schedule of ABC Company Limited (the
Company) as at March 31, 20XX (“the Schedule”).
In our opinion, the financial information in the Schedule of the Company as at March
31, 20XX is prepared, in all material respects, in accordance with [describe the
financial reporting provisions established by the regulator].
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 Schedule 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
Schedule 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
We draw attention to Note X to the Schedule, which describes the basis of
accounting. The Schedule is prepared to assist the Company to meet the
requirements of Regulator DEF. As a result, the Schedule may not be suitable for
another purpose. Our report is intended solely for the Company and Regulator DEF
and should not be distributed to parties other than the Company or Regulator DEF.
Our opinion is not modified in respect of this matter.
41
Management’s Responsibility for the Schedule
The Company’s Board of Directors is responsible for the preparation of the Schedule
in accordance with [describe the financial reporting provisions established by the
regulator]; this includes the design, implementation and maintenance of internal
control relevant to the preparation of the Schedule that is free from material
misstatement, whether due to fraud or error.
In preparing the Schedule, the Board of Directors is 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.
41 Or other term that is appropriate in the context of the applicable legal framework.
24
Auditor’s Responsibilities for the Audit of the Schedule
Our objectives are to obtain reasonable assurance about whether the Schedule is
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 this Schedule.
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 Schedule, 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
control42.
• 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.
42 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 Schedule.
25
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)
(Designation43)
Membership Number
UDIN
Place of Signature
Date
43 Partner or Proprietor, as the case may be.
26