SA 805 Revision for CA Final Audit New syllabus - Auditing Standards|| Special purpose FRFW

[Music] hello hi guys this is C balakrishna from lecture pedia.com it will be dealing with audit of single financial statement or audit of a specific element or item of a financial statement now single financial statement means basically financial statements they'll include pnl balance sheet cash flow all right but in some situations auditor might be appointed to audit only a particular financial statement like audit only profit and loss statement and give audit report okay on only pnl statement or audit only cash flows and give the audit report on cash flows this type of assignment might be done by a Auditor in that situations auditor he needs to apply the requirements of sa 85 in the same way auditor might be appointed to audit a particular line item of a financial statement like Revenue audit or inventory audit these are specific items or elements of a financial statements only that particular item will be audited by the auditor and he will give the audit report in those types of engagements he will be using the requirements of ESS 85 hope that is clear now in the previous class we have revised sa 800 which deals with special purpose financial reporting framework now let us see what is the link between sa 800 and sa 85 now if single financial statement has been prepared as per general purpose financial reporting framework with the help of general purpose fin general purpose financial reporting framework single financial statement has been prepared in that case sa 85 will be applicable and remaining s ESS 8 100 to that 700 series they will also be applicable next situation if the single financial statement has been prepared as per special purpose financial reporting framework in that case Yesa 85 will however be applicable because it is a single financial statement along with sa 85 sa 800 also gets applicable because special purpose financial reporting framework is being followed for the preparation of that single financial statement and S say 100 to 700 series they will however be applicable so this is the interlinking between sa 800 and sa 85 here you can find it interplay between sa 800 and sa 85 five next moving to the standard as I have already told you in the previous 800 revision video this 800 series standards you can divide them into three parts first one considerations with respect to accepting the engagement considerations with respect to planning and Performing the engagement consideration with respect to reporting so first part that is consideration while accepting the engagement now while accepting the Eng agement first of all the the financial reporting framework that is used by the management should be acceptable to the auditor so determine acceptability of the financial reporting framework and whether that financial reporting framework is providing adequate disclosures that are necessary for the users that you will check next if the single financial statement has been prepared as per a financial reporting framework and this financial reporting framework is developed based on a financial reporting framework that is used for complete set of financial statements and that financial reporting framework is developed by a standard setting organization let me tell you somewhat clearly okay single financial statements these singles financial statements have been developed based on a financial reporting framework now this financial reporting framework itself has been developed based on a s based on a financial reporting framework that is used for complete set of financial statements okay and this financial reporting framework which is used for a complete set of financial statements has been developed by a standard setting organization okay now standards setting organization has developed a financial reporting framework for a complete set of financial statements based on that financial reporting framework a particular financial reporting framework for the purpose of single financial statements has been developed and as for that single financial statements have been prepared in that case this financial reporting framework will be acceptable to the auditor if this financial reporting framework includes most of the elements or most of the require requirements of the financial reporting framework on which it is based that is on this financial reporting framework in that case the first financial reporting framework will be acceptable to the auditor hope you understood this next considerations in planning and Performing the audit first of all all the relevant standards on auditing will be applicable for audit of single financial statements or audit of specific item or element of a financial statements all relevant standards will be applicable next if auditing complete set of financial statements if auditor is auditing complete set of financial statements along with single financial statements okay both the engagements are assigned to single auditor only in that case that auditor needs to give a separate audit report for both the engagements you cannot give same audit report for audit of complete set of financial statements as well as compl as well as audit of single financial statement or audit of a particular item of financial statements you need to give separate audit reports hope that is clear next auditor he might also be required to perform audit procedures on interrelated areas let's say for example auditor has been appointed an engagement to audit inventory okay a single item of the financial statement inventory auditor now inventory that that is the closing stock it will be dependent on sales purchases so auditor he needs to perform audit procedures even on sales and purchase also because they are interrelated hope that is clear and finally he needs to determine materiality for the single financial statements he might have determined materiality for the complete set of financial statement audit but for single financial statement audit also he needs to determine a separate materiality because the materiality for the single financial statements will be lower when compl when comp to the materiality for the complete set of financial statements you cannot take the same materiality you have to again determine materiality as per S320 for audit of the single financial statement or audit of specific element of the financial statement hope that is clear next coming to the reporting aspect now in this essay 85 reporting aspect is most important if you directly read this from the book you'll not be able to understand you first of all go through this table then read from the book you'll be able to understand see now reporting here there are audits of uh three elements one is audit of complete set of financial statements okay audit report on complete set of financial statements audit report on audit of single financial statement audit report on audit of a particular element or item of financial statements now what type of opinion the auditor can give will depend based on the opinion that the Alor has given on complete set of financial statement see if on complete set the auditor's opinion is unmodified in that case auditor can give either modified opinion or unmodified opinion for audit of single financial statement in the same way he can give either modified opinion or unmodified opinion for audit of a particular element or item of financial statement hope this is clear here modified means three types of opinion any of those three types that is qualified address disclaimer of those three anyone can be given or unmodified that is clean opinion can be given next if auditor has given qualified opinion on complete set of financial statements in that case also he can give either modified or unmodified for single financial statements modified or unmodified for a particular element or item of financial statement this is easy coming to the third one if auditor has given adverse opinion on complete set of financial statement then the auditor's opinion on single financial statements must be only modified opinion why because on complete set of financial statements AIT is giving adverse opinion that means he is stating that financial statements are not showing true and Fair View like this he is saying for complete set of financial statements but for single financial statements he is saying this single financial statement is showing true and Fair View how is that possible it will be contradictory in nature so if he has given modified opinion uh not modified if he has given adverse opinion for complete set of financial statement then he should give only modified opinion for single Financial statement hope that is clear modified means any of those three qualified adver any of those three can be given but he should give only modified opinion he cannot give uh unmodified opinion that is clean opinion he cannot give but however if he has given qualified opinion for complete set of financial statements then he can give unmodified opinion for single financial statement or element or a particular item or element of financial statement but that is not possible for adver why because in qualified opinion what will be your terminology except for a particular item remaining financial statements are showing true and fair you like like that you will say for qualified opinion but for adverse opinion you are saying that financial statements to uh most of the extent of financial statement okay entire financial statement they are not showing true and fair you okay negatively you are giving in case of adverse opinion your terminology is negative so if you give clean opinion for single financial statement in this situation the both the opinions will be contradictory in nature so you cannot give it but however uh for element or item also you need to give only modified opinion but there are certain exception for this I have given it as exception one that means in that exceptional situation even though you have given adverse opinion for complete set of financial statement you can give clean opinion for a particular element or item of the financial statement okay this exception it is not applicable in this single financial statement hope that is clear what is this exception we'll see it next fourth situation if you have given disclaimer of opinion for complete set of financial statement then also you have to give only modified opinion for single financial statement however in exceptional cases you can give unmodified opinion here exception is applicable but it is exception number two there are two exceptions okay here in the third situation exception one is applicable for single element or item but here in the fourth situation for single financial statement exception two is applicable what is exception one what is exception two I will explain you and again if you have given disclaimer of opinion for complete set of financial statement then for element or item you must give only modified opinion but however in exceptional situation you can give unmodified opinion now coming to what are those exceptional situations exception number one that means in these two situations in those two situations even though aders or disclaimer of opinion has been given for audit of single element or item of financial statement you can give unmodified opinion in this exceptional cases what what what is that exceptional case let us see law or regulation does not prohibit giving unmodified opinion okay first of all law or regulation should not prohibit from giving unmodified opinion and both audit reports are not published together okay because in the audit of complete set of financial statement you have given adverse opinion or disclaimer of opinion and in the audit of single element or item of financial statement you are giving unmodified opinion clean opinion if you wanted to give clean opinion then both these audit reports they should not be published together this is also one of the point in the exception next and specific element does not constitute major portion of the financial statement okay that particular specific element which you are auditing that should not constitute major portion of the complete set of financial statement if these three are satisfied then even though you have given adver or disclaimer of opinion for complete set of financial statement you can give unmodified opinion for single element or item of financial statement okay but this exception one it is not applicable for audit of single financial statement it is applicable only for audit of single element or item of financial statement hope that is clear it is very important that you understand this next exception two exception two it is applicable for audit of single financial statement see here in the table you can find exception to I have kept that two only in case of disclaimer of opinion for adver of of opinion no exception is applicable okay see now what is this exception to Auditor in the complete set of financial statement he has given disclaimer of opinion disclaimer of opinion means he is not able to obtain sufficient appropriate audit evidence and if at all there are any misstatements that misstatements will be both material and pervasive like this the auditor has concluded in that situation he will give disclaimer of opinion now in the complete set of financial statements let's say for example because of profit and loss statement and cash flow statement auditor is giving disclaimer of opinion he has not obtained audit evidences with respect to profit and loss and cash flow so he is giving disclaimer of opinion but but with respect to balance sheet he has obtained audit evidence and he is completely satisfied with respect to balance sheet but this audit is with respect to entire financial statement now he cannot give his opinion only on the balance sheet in the complete set of financial statements so even though his opinion with respect to balance sheet is unmodified since with respect to pnl and cash flow he is not able to obtain sufficient appropriate a evidence overall he need to give disclaimer of opinion now in this situation because of this he has given disclaimer of opinion now the same auditor has been given the engagement to audit only balance sheet now with respect to balance sheet his opinion is unmodified he has obtained all the audit evidences with respect to balance sheet and he is completely satisfied now in this situation with respect expect to balance sheet since he has obtained all the audit evidences and his uh he is completely satisfied with the balance sheet he can give unmodified opinion with respect to the balance sheet even though he has given disclaimer of opinion on the complete set of financial statements that is the exception number two okay in these types of situations okay if the disclaimer of opinion is not because of the single financial statement then you can give unmodified opinion for the audit of single financial statement and disclaimer of opinion for the complete set of financial statements I know uh with uh this I have tried maximum to explain completely in this revision video Even if you are not able to understand you just once go through this chart and again listen to this class you'll 100% understand okay yes note issue separate uh report for audit of single financial statement element and audit of complete set of financial statements you need to give separate audit report now this is a revision with respect to essay 85 and this chart you can download it from the link that I will be providing you in the description and if you want to purchase audit classes you can visit our website lecture pdia doin and and you can place your order okay I'll be winding up this video as of now take care bye-bye see [Music] you

Channel: CA Balakrishna kovuru

Views: 9,511

Keywords: ca final, sa 805, sa 805 audit, sa 805 revision ca final, ca final audit sa 805, standards on auditing, ca final audit new syllabus, ca final audit marathon, ca final audit revision may 24, audit new syllabus final, audit new scheme, audit new syllabus, lecturepedia, cabalakrishna, ca final audit revision, special considerations, sa 805 revision for may 24

Id: FjI_6QJbfdU

Length: 18min 38sec (1118 seconds)

Published: Wed Nov 15 2023