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Guide for Auditors

Auditing Summary
Financial Statements
STANDARD DISCUSSED
CAS 810, Engagements to Report on Summary Financial Statements

CANADIAN AUDITING STANDARDS IMPLEMENTATION | PRACTITIONER SUPPORT

Guide for Auditors Auditing Summary Financial Statements STANDARD DISCUSSED CAS 810. Engagements to Report on Summary Financial Statements .

the governing body or membership of CPA Canada or any provincial institute/Ordre. Practitioners are expected to use professional judgment in determining whether the material in this guide is both appropriate and relevant to the circumstances of their particular engagement. .Disclaimer This guide provides non-authoritative guidance and has not been adopted. It is based on the CASs as of February 2014. approved or otherwise acted upon by the Auditing and Assurance Standards Board. any CPA Canada board or committee. endorsed.

any CPA Canada board or committee. the governing body or membership of CPA Canada or any provincial institute/Ordre. and Andrée Lavigne. for preparing this guide. About this Publication CPA Canada undertakes initiatives to support practitioners and businesses in the implementation of standards. CPA Canada expresses its appreciation to staff. endorsed. CPA. Auditors are expected to use professional judgment in determining whether the material in this guide is both appropriate and relevant to the circumstances of their particular engagements. This guide is based on the CASs as of February 2014. It has not been adopted. Taryn Abate. approved or otherwise acted on by the Auditing and Assurance Standards Board. This guide provides non-authoritative guidance for practitioners auditing summary financial statements under Canadian Auditing Standard (CAS) 810. CA. CA. Engagements to Report on Summary Financial Statements. CPA. .

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what additional procedures are required to complete the engagement? 7 Q8: How is an auditor’s report on summary financial statements different? 8 Example 3: Sample auditor’s report Q9: Are there any differences in the auditor’s report when the financial statements are based on a special purpose framework? Example 4: Modification to the auditor’s report when using a special purpose framework Other resources 9 11 11 12 . Table of Contents Purpose and Scope of this Guide Diagram: CAS 810 requirements discussed in this guide 1 1 Q1: What are summary financial statements? 2 Q2: Are there generally recognized criteria for preparing summary financial statements? How does this affect the audit? 2 Q3: What conditions must be satisfied and what actions must be performed before accepting an engagement to report on summary financial statements? 3 Q4: How does the auditor determine if the applied criteria are acceptable? 3 Q5: What guidance can the auditor give clients on developing the applied criteria? 4 Example 1: Note disclosure of applied criteria 5 Q6: Do summary financial statements need to have comparative information? 6 Example 2: Modification to the auditor’s report for comparative information 6 Q7: When the auditor has already reported on the audited financial statements.

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Diagram: CAS 810 requirements discussed in this guide CAS 810 Engagement Acceptance Procedures Questions Ex. 4 2. 5 Acceptable applied criteria Par. 20 Comparitives Par. 14 – 19 9 4 Restriction on distribution or use or alerting readers to the basis of accounting Par. 9 – 11 Timing of work and events subsequent to the date of the auditor’s report Par. addresses with their corresponding paragraph references. 8 Form of opinion Par. The dark green sections are the topics discussed in this Guide.’s” show the topics covered by each question and example to facilitate navigation through the Guide. and • reporting on summary financial statements in accordance with CAS 810. The table below shows the topics Canadian Auditing Standard (CAS) 810. 5 1 8 3 Auditor’s report on summary financial statements Par. 21 – 22 Unaudited supplementary information presented with summary financial statements Par. 6(b – c) 7 Nature of procedures Par. 24 Auditor association Par. It discusses areas that have been noted as difficult when: • preparing summary financial statements. 6(a) 3 Management’s responsibilities Par.’s” relate to the following: Assurance question Accounting question Example 1 . 23 Other information in documents containing summary financial statements Par.GUIDE FOR AUDITORS | Auditing  Summary Financial Statements PURPOSE AND SCOPE OF THIS GUIDE This Guide provides guidance to auditors who report on summary financial statements derived from an entity’s audited financial statements. 25 – 26 Reporting 6 Other Auditor’s Responsibilities 2 The “Questions and Ex. 12 – 13 3 1 2.’s CAS 810 Sections and References Audited financial statements Par. The columns “Questions” and “Ex. Engagements to Report on Summary Financial Statements.

it refers to the complete set of financial statements. Engagements to report on summary financial statements Q1: What are summary financial statements? Paragraph 4(c) of CAS 810 defines summary financial statements as: “Historical financial information that is derived from financial statements but that contains less detail than the financial statements. as determined by the requirements of the applicable financial reporting framework.2 CAS 810.” Paragraph 4(b) of CAS 810 defines audited financial statements as “financial statements audited by the auditor in accordance with CASs. but are consistent with their presentation. those set out in legislation or regulation) that are not specific enough to determine what information should be included in the summary financial statements. and from which the summary financial statements are derived. when this Guide refers to audited financial statements. • They are based on applied criteria that may either be mandated by regulation or legislation or are developed by management. from which the summary financial statements are derived. determining the acceptability of the applied criteria will be more challenging and there may be a greater risk that summary financial statements may be misleading. 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.” Therefore. there are currently no generally recognized criteria for preparing summary financial statements. when summary financial statements must be prepared. • They are reported on by the same auditors who reported on the audited financial statements. As a result. often either: (a) management has to develop the criteria to apply in preparing the summary financial statements. Different jurisdictions may use different terminology to describe such historical financial information. In these circumstances. Here are some key points to remember about summary financial statements: • They are derived from audited financial statements prepared using a general purpose or special purpose framework. Q2: Are there generally recognized criteria for preparing summary financial statements? How does this affect the audit? In Canada. or (b) management has to apply established criteria (for example. • They contain less detail than audited financial statements. .

of the financial statements from which the summary financial statements are derived. oo The financial statements may be prepared in accordance with a general-purpose or special-purpose framework. • The information needs of the intended users of the summary financial statements. and oo to include the auditor’s report on the summary financial statement in any document that contains the summary financial statements and indicates that the auditor has reported on them. Q4: How does the auditor determine if the applied criteria are acceptable? [CAS 810 paragraphs A3 – A7] Before accepting an engagement to report on summary financial statements. The auditor shall determine whether the applied criteria are acceptable. • The nature of the entity. If there is a law or regulation that says the audited financial statements do not need to be made available to the intended users of the summary financial statements and that law establishes the criteria for the preparation of the summary financial statements. The following elements may affect the auditors determination. 3 . the auditor shall determine whether the applied criteria are acceptable. The auditor shall obtain the agreement of management that it acknowledges and understands its responsibility: oo for the preparation of the summary financial statements in accordance with the applied criteria. • The purpose of the summary financial statements. the law or regulations must be described in the summary financial statements.GUIDE FOR AUDITORS | Auditing Summary Financial Statements Q3: What conditions must be satisfied and what actions must be performed before accepting an engagement to report on summary financial statements? [CAS 810 paragraphs 5 – 7] • • • • The auditor must have been engaged to conduct an audit. The auditor and management shall agree on the form of opinion to be expressed on the summary financial statements. in accordance with CASs. oo to make the audited financial statements available to the intended users of the summary financial statements without undue difficulty.

income statement. . management should first look for criteria established by an authorized or recognized standard-setting organization. Where there are no established criteria for the preparation of summary financial statements. Q5: What guidance can the auditor give clients on developing the applied criteria? When preparing summary financial statements. or (b) the law or regulation that establishes the criteria for the preparation of the summary financial statements and states that the audited financial statements need not be made available to the intended users of the summary financial statements. management’s criteria might specify that the summary financial statements include: • A summary financial statement for each of the financial statements in the audited financial statements. cash flow statement or other statements included in the audited financial statements should be provided. contain the information necessary. If any of these are not provided. For example. that may be considered acceptable.4 CAS 810. as in the case of financial statements. oo adequately disclose the applied criteria. Whether there are criteria established by an authorized or recognized standard-setting organization. practice in a particular industry. Where established criteria do not exist. Whether establishing criteria will result in summary financial statements that: oo adequately disclose their summarized nature and identify the audited financial statements. for example. management may develop the criteria based on. or by law or regulation. that may be considered acceptable. so as not to be misleading in the circumstances. the basis for not including them should be described in the criteria. looking at practice in a particular industry. for example. oo agree with or can be recalculated from the related information in the audited financial statements. Engagements to report on summary financial statements • • • • Whether the applied criteria will result in summary financial statements that are not misleading in the circumstances. whether management can develop the criteria by. and at an appropriate level of aggregation. or by law or regulation. as in the case of financial statements. oo clearly specify (a) from whom or where the audited financial statements are available. Agreeing the terms of audit engagements. Management will use professional judgment in developing acceptable criteria. oo Consider if a summarized financial statement for each of the balance sheet. and oo depending on the purpose of the summary financial statements. as discussed in CAS 210.

prepared in accordance with Canadian accounting standards for not-forprofit organizations. and (d) the summary financial statements contain the information from the audited financial statements dealing with matters having a pervasive or otherwise significant effect on the summarized financial statements. 2012 and March 31. 5 . The preparation of these summary financial statements requires management to determine the information that needs to be reflected in them so that they are consistent in all material respects with. or represent a fair summary of. as at March 31. Information from notes to the audited financial statements dealing with matters having a pervasive or otherwise significant effect on the summary financial statements. such as: oo going concern oo contingencies oo subsequent events oo significant accounting policies. (b) information in the summary financial statements agrees with the related information in the audited financial statements. the audited financial statements. A description of the criteria applied in the preparation of the summary financial statements. (c) major subtotals. 2011 and for the years then ended. judgments or estimates oo commitments. Specification of from whom or where the audited financial statements are available. The audited financial statements of the ABC NFPO are available upon request by contacting the Organization. Management prepared these summary financial statements using the following criteria: (a) the summary financial statements include a statement for each statement included in the audited financial statements. totals and comparative information from the audited financial statements are included. Example 1: Note disclosure of applied criteria Summary financial statements: The summary financial statements are derived from the audited financial statements. Information necessary to achieve a fair summary of the audited financial statements.GUIDE FOR AUDITORS | Auditing • • • • • Summary Financial Statements The major subtotals and totals from the audited financial statements.

but was reported on by another auditor. 20X0 and expressed an unmodified opinion on those summary financial statements on [date]. Example 2: Modification to the auditor’s report for comparative information When comparative information is included in the summary financial statements. Engagements to report on summary financial statements Q6: Do summary financial statements need to have comparative information? [CAS 810 paragraphs 21 – 22] If the audited financial statements contain comparative information. 20X0 were audited by other auditors who expressed an unmodified opinion on those statements on [date]. the auditor’s report on the summary financial statements shall also contain the matters that CAS 710. and • the information needs of the intended users of the summary financial statements. a modification to the auditor’s report is required. the auditor shall determine whether such omission is reasonable in the circumstances of the engagement. there is a presumption that the summary financial statements will also contain comparative information. but they were reported on by another auditor. If the summary financial statements do contain comparative information. . Comparative information — corresponding figures and comparative financial statements. requires the auditor to include in the auditor’s report on the audited financial statements.6 CAS 810. Such auditors also audited the summary financial statements of ABC Company for the year ended March 31. An example of this modification is as follows: Other Matters Our auditor’s report dated [date] on the audited financial statements included an Other Matter paragraph drawing attention to the fact that the financial statements of ABC Company for the year ended March 31. Circumstances that may affect this determination include: • the nature and objective of the summary financial statements. If the audited financial statements contain comparative information. but the summary financial statements do not. • the applied criteria.

the conclusions reached thereon. whether the summary financial statements contain the information necessary. to understand: (a) the nature. having no previous connection with the audit. Evaluate whether the summary financial statements are prepared in accordance with the applied criteria. as the basis for the auditor’s opinion on the summary financial statements. The required procedures are described in each bullet point in the table below. what additional procedures are required to complete the engagement? [CAS 810 paragraph 8] CAS 810 requires that the auditor has already reported on the audited financial statements when performing an engagement to report on the same entity’s summary financial statements. the related information in the audited financial statements. or can be recalculated from. Procedures performed should be documented so that. Evaluate. and are at an appropriate level of aggregation. (c) major subtotals. Audit Documentation. Procedures Example note disclosure (if applicable) • “Management prepared these summary financial statements using the following criteria: (a) the summary financial statements include a statement for each statement included in the audited financial statements. and (c) Significant matters arising during the audit. and the audit evidence obtained. and (d) the summary financial statements contain the information from the audited financial statements dealing with matters having a pervasive or otherwise significant effect on the summary financial statements. Paragraph 8 of CAS 810 requires specific procedures to be performed.GUIDE FOR AUDITORS | Auditing Summary Financial Statements Q7: When the auditor has already reported on the audited financial statements. the documentation is sufficient to enable an experienced auditor. and significant professional judgments made in reaching those conclusions. in accordance with CAS 230. 7 . totals and comparative information from the audited financial statements are included. and any other procedures that the auditor may consider necessary. (b) The results of the audit procedures performed. timing and extent of procedures performed to comply with the CASs and applicable legal regulatory requirements. Evaluate whether the summary financial statements adequately disclose the applied criteria. which also provides some examples of disclosures related to the procedures. in view of the purpose of the summary financial statements. so as not to be misleading in the circumstances. (b) information in the summary financial statements agrees with the related information in the completed set of audited financial statements.” • • • Compare the summary financial statements with the related information in the audited financial statements to determine whether the summary financial statements agree with.

prepared in accordance with Canadian accounting standards for not-for-profit organizations. unless law or regulation provides that they need not be made available and establishes the criteria for the preparation of the summary financial statements.” • When the summary financial statements are not accompanied by the audited financial statements. Evaluate whether the audited financial statements are available to the intended users of the summary financial statements without undue difficulty. and March 31. or oo the law or regulation that specifies that the audited financial statements need not be made available to the intended users of the summary financial statements and establishes the criteria for the preparation of the summary financial statements. a statement should be included indicating that the summary financial statements and the audited financial statements do not reflect the effects of events subsequent to the date of the auditor’s report on the audited financial statements.8 CAS 810. . evaluate whether they describe clearly: oo from whom or where the audited financial statements are available. and for the years then ended. Introductory Paragraph • If the date of the auditor’s report on the summary financial statements is later than the date of the auditor’s report on the audited financial statements. 2011. 2012. as at March 31. If the date of the auditor’s report on the summary financial statements is the same as the date of the auditor’s report on the audited financial statement.” • Q8: How is an auditor’s report on summary financial statements different? [CAS 810 paragraphs 14 – 19] Some of the elements peculiar to the auditor’s report on summary financial statements have been highlighted below. no such statement is required. Engagements to report on summary financial statements Procedures Example note disclosure (if applicable) • Evaluate whether the summary financial statements adequately disclose their summarized nature and identify the audited financial statements “The summary financial statements are derived from the audited financial statements. “The audited financial statements of the ABC NFPO are available on request by contacting the Organization.

the summary statement of changes in equity and the summary cash flow statement for the year then ended. 9 . Auditor’s Responsibility • An explanation that the auditor is responsible for expressing an opinion on the summary financial statements based on procedures conducted in accordance with CAS 810. The criteria should not be described by reference to one of the financial reporting frameworks in the CPA Canada Handbook – Accounting as these frameworks are designed for complete sets of financial statements. Management’s Responsibility • An explanation that management is responsible for the preparation of the summary financial statements in accordance with the applied criteria. note that the report would not state that the work was performed in accordance with Canadian generally accepted auditing standards as in the auditor’s report on the audited financial statements. the summary income statement. which comprise the summary balance sheet as at December 31. and related notes. are derived from the audited financial statements of ABC Company for the year ended December 31. Example 3: Sample auditor’s report REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARY FINANCIAL STATEMENTS [Appropriate Addressee] The accompanying summary financial statements. Opinion Paragraph • A description of the applied criteria in the opinion paragraph or a reference to the financial statement note describing the criteria.GUIDE FOR AUDITORS | Auditing • Summary Financial Statements A statement indicating that the summary financial statements do not contain all of the disclosures required by the financial reporting framework applied in the preparation of the audited financial statements and that reading the summary financial statements is not a substitute for reading the audited financial statements. 20X1. 20X1. note that the report would not state that the statements are presented in accordance with a financial reporting framework as in the auditor’s report on the audited financial statements.

20X1 are a fair summary of those financial statements. Be sure to reference in accordance with [describe established criteria the applied criteria here. Auditor’s Responsibility Our responsibility is to express an opinion on the summary financial statements based on our procedures. Canadian GAAP! [Auditor’s signature] [Date of the auditor’s report] [Auditor’s address] . Do NOT state or refer to Note X].10 CAS 810. Reading the summary financial statements. Insert applicable reference to the applied criteria. do not reflect the effects of events that occurred subsequent to the date of our report on those financial statements. Either describe the criteria here or refer to the financial statement notes (e. is not a substitute for reading the audited financial statements of ABC Company.] Extra sentence only required if date of auditor’s report on summary financial statements differs from the date on the auditor’s report on the financial statements The summary financial statements do not contain all the disclosures required by [describe financial reporting framework applied in the preparation of the audited financial statements of ABC Company]. 20X2. management is responsible for the preparation of a summary of the audited financial statements on the basis described in Note X). the summary financial statements derived from the audited financial statements of ABC Company for the year ended December 31.g. [Those financial statements. Management’s Responsibility for the Summary Financial Statements Management is responsible for the preparation of a summary of the audited financial statements in accordance with [describe established criteria]. which were conducted in accordance with Canadian Auditing Standard (CAS) 810.. Engagements to report on summary financial statements We expressed an unmodified audit opinion on those financial statements in our report dated February 15. therefore. Engagements to report on summary financial statements. Opinion In our opinion. and the summary financial statements.

the financial statements may not be suitable for another purpose. Example 4: Modification to the auditor’s report when using a special purpose framework Emphasis of Matter Our auditor’s report dated [date] on the audited financial statements included an Emphasis of Matter paragraph. the audited financial statements may not be suitable for another purpose. CAS 810 paragraph 20] Yes. or the auditor’s report on the audited financial statements alerts readers that the audited financial statements are prepared in accordance with a special purpose framework. 11 . the auditor shall include a similar restriction or alert in the auditor’s report on the summary financial statements. Paragraph 20 of CAS 810 also indicates that. The audited financial statements are prepared to assist ABC Company to meet the requirements of Regulator DEF. As a result. drawing attention to the note to the financial statements that describes the basis of accounting. as a result. when distribution or use of the auditor’s report on the audited financial statements is restricted. Because the summary financial statements are derived from the audited financial statements. Paragraph 14 of CAS 800 requires the auditor’s report on financial statements prepared in accordance with a special purpose framework to 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. the summary financial statements also may not be suitable for another purpose.GUIDE FOR AUDITORS | Auditing Summary Financial Statements Q9: Are there any differences in the auditor’s report when the financial statements are based on a special purpose framework? [CAS 800 paragraph 14.

CPA Canada Handbook. pp. Engagements to report on summary financial statements Other resources • • Reporting Implications of New Auditing and Accounting Standards. Issue No. 11 (January 2014. Engagements to Report on Summary Financial Statements and Application and Other Explanatory Material . Canadian Auditing Standard 810. 50 – 54). Q&A 2(h).12 CAS 810.

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