ISA 805 - Special Considerations - Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement

Question 1

ISA 805 (Revised) – Special Considerations—Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement

Answer 1

ISA 805 (Revised) – Introduction

1. Scope of this ISA

It 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 group engagement team for purposes of an ‘audit‘ of Group Financial Statements.

2. Effective Date

This ISA is EFFECTIVE for audits of Single Financial Statements or Specific Elements, Accounts or Items for periods ending on or after December 15, 2016.

Question 2

ISA 805 – Objective

Answer 2

The objective of the ‘auditor’ as per ISA 805 is to ADDRESS appropriately the special considerations that are relevant to:

The Acceptance of the engagement;

The Planning and Performance of that engagement; AND

Forming an opinion and Reporting on the ‘Single Financial Statement’ or on the ‘Specific Element’, ‘Account’ or ‘Item’ of a financial statement

Question 3

ISA 805 – Definitions

Answer 3

1. Element of a Financial Statement or Element

An Element, Account or Item of a financial statement.

2. International Financial Reporting Standards

IFRS’s issued by the International Accounting Standards Board (IASB)

Question 4

ISA 805 – Requirements

1.Considerations When Accepting the Engagement

Answer 4

1.1 Application of ISAs

ISA 200 requires the ‘auditor’ to COMPLY with all ISAs relevant to the audit.

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.

1.2 Acceptability of Financial Reporting Framework

ISA 210 requires the ‘auditor’ to DETERMINE the acceptability of the financial reporting framework.

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.

1.3 Form of Opinion

ISA 210 requires that the agreed terms of the Audit Engagement INCLUDE the expected form of any reports to be issued by the ‘auditor’.

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.

Question 5

ISA 805: 2. Considerations When Planning and Performing the Engagement

Answer 5

ISA 200 states that ISAs are written in the context of an ‘audit‘ of Financial Statements.

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 ISAs relevant to the audit as necessary in the circumstances of the engagement.

Question 6

ISA 805: 3. Forming an Opinion and Reporting Considerations

Answer 6

The ‘auditor’ shall APPLY the requirements in ISA 700 (Revised) and when applicable, ISA 800 (Revised) adapted as necessary in the circumstances of the engagement.

3.1 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

If the ‘auditor’ undertakes an engagement to report 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.

If the auditor’s report on an entity’s ‘Complete Set of Financial Statements‘ INCLUDES:

(a) A ‘MODIFIED Opinion‘ in accordance with ISA 705 (Revised) ;(b) An ‘Emphasis of Matter Paragraph‘ or an ‘Other Matter Paragraph‘ in accordance with ISA 706 (Revised); (c) A ‘Material Uncertainty Related to Going Concern‘ section in accordance with ISA 570 (Revised);(d) Communication of ‘Key Audit Matters‘ in accordance withISA 701;OR (e) Astatement that describes an uncorrected material misstatement of the ‘Other Information‘ in accordance with ISA 720 (Revised).

the ‘auditor’ shall CONSIDER the implications, if any.

3.2 Adverse Opinion or Disclaimer of Opinion in the Auditor’s Report on the Entity’s Complete Set of Financial Statements

ISA 705 (Revised) does NOT PERMIT the ‘auditor’ to include in the same auditor’s report an ‘UNMODIFIED’ opinion on a single financial statement or on a specific element.

If the auditor NEVERTHELESS considers it appropriate to express an ‘UNMODIFIED’ opinion on a specific element of those financial statements, the auditor shall ONLY DO so if:

The auditor is NOT prohibited by law or regulation from doing so;

That opinion is expressed in the auditor’s report that is NOT published together with the auditor’s report containing the ‘ADVERSE’ opinion or ‘DISCLAIMER; of opinion; OR

The element does NOT constitute a major portion of the entity’s complete set of financial statements.

Question 7

ISA 805: Synopsis

Answer 7

The International Standard on Auditing ISA 805‘Special Considerations—Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement’ DEALS with special considerations in the application of ISAs 200-700 to an audit of a ‘Single Financial Statement’ or of a ‘Specific Element’, ‘Account’ or ‘Item’ of a financial statement.

ISA 800

ISA 810