ISA 805 (Revised) DEALS with Special Considerations in the APPLICATION of ISAs 100-700 to an audit of a ‘Single Financial Statement’ or of a ‘Specific Element’, ‘Account’ or ‘Item’ of a financial statement.
Table of Contents
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.
ISA 805 – Objective
The Objective of the ‘Auditor’ is to ADDRESS appropriately the special considerations that are relevant to:
- The Acceptance;
- The Planning and Performance; AND
- Forming an opinion and Reporting on the ‘Single Financial Statement’ or on the ‘Specific Element’, ‘Account’ or ‘Item’ of a financial statement.
ISA 805 – Definitions
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).
ISA 805 – Requirements
1. Considerations When Accepting the Engagement
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.
2. Considerations When Planning and Performing the Engagement
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.
3. Forming an Opinion and Reporting Considerations
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 with ISA 701; OR |
| (e) A Statement 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.
Synopsis
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 100-700 to an audit of a ‘Single Financial Statement’ or of a ‘Specific Element’, ‘Account’ or ‘Item’ of a financial statement.
[800-899] Specialized Areas
Chartered Accountant – ICAP
Bachelor of Accounting (Honours) – AeU, Malaysia