Reporting on Summary Financial Statements

Question 1

What is meant by the term “summary financial statements”?

Answer 1

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

Question 2

What is meant by the term “applied criteria” in connection with summary financial statements?

Answer 2

The criteria applied by management in the preparation of the summary financial statements

Question 3

Identify the only two opinion choices for the auditor’s report on summary financial statements.

Answer 3

Only an unmodified or adverse opinion is permitted. That is, the summary financial statements are either consistent or not consistent with the audited financial statements.

Question 4

What should the auditor consider in deciding whether to accept an engagement to report on an entity’s summary financial statements (specifically, to report whether they are consistent with the audited financial statements from which they have been derived)?

Answer 4

1. )The auditor must have been engaged to audit the financial statements as a whole.
2. )The auditor should determine whether the applied criteria are acceptable.
3. )The auditor should obtain a written agreement from management acknowledging their responsibilities and accepting the expected form and content of the auditor’s report.