Standard on Auditing (SA) 805 (Revised):Special Considerations – Audits of Single Financial Statements and specific elements, accounts or items of a Financial Statement
Scope of this SA:
The SAs, spanning the 100-700 series, are primarily designed for audits of financial statements. The main purpose of this specific SA is to address special considerations when applying the SAs to audits of:
o A single financial statement, or o A specific element, account, or item of a financial statement.
A single financial statement is to be distinguished from a complete set of financial statements. For example, a cash flow statement is a single financial statement. This revised standard is effective for audits of single financial statements or specific elements, accounts, or items for periods starting on or after April 1, 2024. If the audit pertains to information prepared as at a specific date, the SA becomes effective for audits of such information prepared as at a date on or after April 1, 2024.
Material Modifications in SA 805 (Revised):
Paragraph 6(b) of SA 805(Revised) has been modified to include a specific reference to financial reporting standards. Financial Reporting Standards includes:
The Accounting Standards issued by the Institute of Chartered Accountants of India;
Accounting Standards notified under the Companies Act, 2013;
The International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board;
The International Public Sector Accounting Standards (IPSASs) issued by the International Public Sector Accounting Standards Board; and
Any other Accounting Standards as may be applicable to the entity.
Inclusion of Indian Accounting Standards: The addition explicitly mentions Accounting Standards issued by ICAI, reflecting the specific accounting framework in India. This acknowledges the authority of ICAI in setting accounting standards and aligns the SA with the regulatory requirements under the Companies Act, 2013.
Consideration of Other Applicable Standards:
The modification recognizes that financial reporting standards in India can also include standards notified under the Companies Act, 2013, or any other relevant accounting standards applicable to the entity.
This ensures a comprehensive coverage of all relevant standards that might influence financial reporting practices in India.
SW Point of View:The revised SA 805 appears to be a well-considered standard that addresses challenges and considerations unique to audits of single financial statements or specific elements. The modifications in SA 805 (Revised) demonstrate an effort to make the standard more relevant to the Indian accounting context. The effectiveness of the standard would depend on its practical implementation and its ability to guide auditors in diverse engagement scenarios.
