Standard on Auditing (SA) 810(Revised): Engagement to Report on Summary Financial Statements

Background:

The SA pertains to engagements where the auditor is reporting on summary financial statements. The SA is effective for engagements to report on summary financial statements for periods beginning on or after April 1, 2024. This indicates that the standard is applicable to engagements conducted on or after the specified date.
The objectives of the auditor are:

• To determine whether it is appropriate to accept the engagement to report on summary financial
  statements; and
• If engaged to report on summary financial statements:
• To form an opinion on the summary financial statements based on an evaluation of the conclusions
  drawn from the evidence obtained; and
• To express clearly that opinion through a written report that also describes the basis for that opinion.

Summary Financial Statements reflect 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.

Changes in SA 810:

“The auditor shall ordinarily accept an engagement to report on summary financial statements in
accordance with this SA only when the auditor has been engaged to conduct an audit in accordance
with SAs of the financial statements from which the summary financial statements are derived.”
The addition of the term “ordinarily” in SA 810 (Revised) introduces flexibility into the standard, acknowledging the existence of certain scenarios in India where auditors might be compelled by law or regulation to report on summary financial statements. This requirement might apply even when auditors haven’t been engaged to conduct audits in accordance with SAs for the corresponding accounting periods.
For example, in the context of the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018,
auditors may be required to provide a report for a prospectus. However, the auditor might not have audited all or some of the financial statements of the company for the specific accounting periods covered by the prospectus. The term “ordinarily” recognizes these exceptional circumstances and allows for the inclusion of auditors in such engagements, even if they haven’t followed the usual process of conducting audits in accordance with SAs. This adjustment aligns the standard with the regulatory landscape in India and ensures auditors have the necessary flexibility to fulfill their reporting obligations in accordance with local laws and regulations.

Swati Suman, Audit Associate, SW India