Application of Australian Auditing Standards

ASA 200 requires the auditor to comply with all Australian Auditing Standards relevant to the audit.^[3]  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 financial report.  If the auditor is not also engaged to audit the entity’s financial report, the auditor shall determine whether the audit of a single financial statement or of a specific element of those financial statements in accordance with Australian Auditing Standards is practicable.  (Ref: Para. A5–A6)

Acceptability of the Financial Reporting Framework

ASA 210 requires the auditor to determine the acceptability of the financial reporting framework applied in the preparation of the financial report.^[4]  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 to enable the intended users to understand the information conveyed in the financial statement or the element, and the effect of material transactions and events on the information conveyed in the financial statement or the element.  (Ref: Para. A7)

Form of Opinion

ASA 210 requires that the agreed terms of the audit engagement include the expected form of any reports to be issued by the auditor.^[5]  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.  (Ref: Para. A8–A9)

ASA 200 states that Australian Auditing Standards are written in the context of an audit of a financial report; they are to be adapted as necessary in the circumstances when applied to audits of other historical financial information.^[6],^[7]  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 Australian Auditing Standards relevant to the audit as necessary in the circumstances of the engagement.  (Ref: Para. A10–A14)

When forming an opinion and reporting on a single financial statement or on a specific element of a financial statement, the auditor shall apply the requirements in ASA 700,^[8] and, when applicable, ASA 800 adapted as necessary in the circumstances of the engagement.  (Ref: Para. A16–A22)

Reporting on the Entity’s Financial Report and on a Single Financial Statement or on a Specific Element of those Financial Statements

If the auditor undertakes an engagement to report on a single financial statement or on a specific element of a financial statement in conjunction with an engagement to audit the entity’s financial report, the auditor shall express a separate opinion for each engagement.

The audited single financial statement or the audited specific element of a financial statement may be published together with the entity’s audited financial report.  If the auditor concludes that the presentation of the single financial statement or of the specific element of a financial statement does not differentiate it sufficiently from the financial report, the auditor shall ask management to rectify the situation.  Subject to paragraphs 15 and 16, the auditor shall also differentiate the opinion on the single financial statement or on the specific element of a financial statement from the opinion on the financial report.  The auditor shall not issue the auditor’s report containing the opinion on the single financial statement or on the specific element of a financial statement until satisfied with the differentiation.

Considering the Implications of Certain Matters Included in the Auditor’s Report on the Entity’s Financial Report for the Audit of the Single Financial Statement or the Specific Element of a Financial Statement and for the Auditor’s Report Thereon

If the auditor’s report on an entity’s financial report includes:

1. A modified opinion in accordance with ASA 705;^[9]
2. An Emphasis of Matter paragraph or an Other Matter paragraph, in accordance with ASA 706,^[10]
3. A Material Uncertainty Related to Going Concern section in accordance with ASA 570;^[11]
4. Communication of key audit matters in accordance with ASA 701;^[12] or
5. A statement that describes an uncorrected material misstatement of the other information in accordance with ASA 720;^[13]

the auditor shall consider the implications, if any, that these matters have for the audit of the single financial statement or of the specific element of a financial statement and for the auditor’s report thereon. (Ref: Para. A23–A27)

Adverse Opinion or Disclaimer of Opinion in the Auditor’s Report on the Entity’s Financial report

If the auditor concludes that it is necessary to express an adverse opinion or disclaim an opinion on the entity’s financial report as a whole, ASA 705 does not permit the auditor to include in the same auditor’s report an unmodified opinion on a single financial statement that forms part of that financial report or on a specific element of that financial report.^[14]  This is because such an unmodified opinion would contradict the adverse opinion or disclaimer of opinion on the entity’s financial report as a whole.  (Ref: Para. A28)

If the auditor concludes that it is necessary to express an adverse opinion or disclaim an opinion on the entity’s financial report as a whole but, in the context of a separate audit of a specific element of those financial statements, the auditor nevertheless considers it appropriate to express an unmodified opinion on that element, the auditor shall only do so if:

1. The auditor is not prohibited by law or regulation from doing so;
2. That opinion is expressed in an auditor’s report that is not published together with the auditor’s report containing the adverse opinion or disclaimer of opinion; and
3. The element does not constitute a major portion of the entity’s financial report.

The auditor shall not express an unmodified opinion on a single financial statement of a financial report if the auditor has expressed an adverse opinion or disclaimed an opinion on the financial report as a whole.  This is the case even if the auditor’s report on the single financial statement is not published together with the auditor’s report containing the adverse opinion or disclaimer of opinion.  This is because a single financial statement is deemed to constitute a major portion of that financial report.