Engagements to report on summary financial statements

 

Summary financial statements is historical financial information that is derived from financial statements but that contains less detail than the financial statements, while still providing a structured representation consistent with that provided by the financial statements of the entity’s economic resources or obligations at a point in time or the changes therein for a period of time. Different jurisdictions may use different terminology to describe such historical financial information.

Example of summary financial statements (Summary statement of financial position) is presented below.



Considerations related to the audit of summary financial statements engagement.

The auditor shall accept an engagement to report on summary financial statements only when the auditor has been engaged to conduct an audit of the financial statements from which the summary financial statements are derived.

Before to accept an engagement to report on summary financial statements, the auditor shall:

·    Determine whether the applied criteria are acceptable. Because summary financial statements by their nature contain aggregated information and limited disclosure, there is an increased risk that they may not contain the information necessary so as not to be misleading in the circumstances. The criteria for the preparation of summary financial statements may be established by an authorized or recognized standards setting organization, by law or regulation or may be developed by management.

·        Obtain the agreement of management that it acknowledges and understands its responsibility.

·       Agree with management the form of opinion to be expressed on the summary financial statements.

 The nature of procedures related to auditing summary financial statements.

Before to form an audit opinion on the summary financial statements the auditor shall perform the following procedures:

·      Evaluate whether the summary financial statements adequately disclose their summarized nature and identify the audited financial statements.

·       Evaluate whether the summary financial statements adequately disclose the applied criteria.

·   Compare the summary financial statements with the related information in the audited financial statements to determine whether the summary financial statements agree with or can be recalculated from the related information in the audited financial statements.

·  Evaluate whether the summary financial statements are prepared in accordance with the applied criteria.

·    Evaluate whether the summary financial statements contain the information necessary, and are at an appropriate level of aggregation, so as not to be misleading in the circumstances.

·    Evaluate whether the audited financial statements are available to the intended users of the summary financial statements without undue difficulty, unless law or regulation provides that they need not be made available. The summary financial statements describe clearly from whom or where the audited financial statements are available. The audited financial statements are on public record.

 An example of an auditor's report on the summary financial statements is presented below.

 





Comments

Post a Comment

Popular posts from this blog

Why do auditors use assertions?

Image
  Assertions are representations by management that are embodied in the financial statements and used by the auditor to consider the different types of potential misstatements that may occur. Assertions may fall into the following categories: Assertions about classes of transactions and events, and related disclosures, for the period under audit : ·         Occurrence —transactions and events that have been recorded or disclosed have occurred, and such transactions and events are related to the company. ·         Completeness —all transactions and events that should have been recorded have been recorded, and all related disclosures that should have been included in the financial statements have been included.   ·         Accuracy —amounts and other data relating to recorded transactions and events have been recorded appropriately, and related disclosures have been appropriately measured and described. ·         Cutoff— transactions and events have been recorded in the correct a
Read more

Audit report

Image
  Audit report is a document  obtained as a result of  an audit of financial statements and attached to the financial statements. This report is needed to convey the opinion expressed by the auditors to the shareholders (or other parties as required by the engagement) on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework.  Matters to be considered when forming the audit opinion on the financial statements To form an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting fram ework the auditor shall consider the following matters: ·        Whether sufficient appropriate audit evidence has been obtained. ·        Whether uncorrected misstatements are material, individually or in aggregate. ·       The qualitative aspects of the entity’s accounting practice, including indicators of possible bias in management’s judgments.
Read more