ISA (NZ) 810 (Revised)

1. This International Standard on Auditing (New Zealand) (ISA (NZ)) deals with the auditor’s responsibilities relating to an engagement to report on summary financial statements derived from financial statements audited in accordance with ISAs (NZ) by that same auditor.

2. This ISA (NZ) is effective for engagements to report on summary financial statements for periods ending on or after December 15, 2016.

NZ2.1 This ISA (NZ) supersedes ISA (NZ) 810, Engagements to Report on Summary Financial Statements.

3. The objectives of the auditor are:

1. To determine whether it is appropriate to accept the engagement to report on summary financial statements; and

2. If engaged to report on summary financial statements:

   1. To form an opinion on the summary financial statements based on an evaluation of the conclusions drawn from the evidence obtained; and

   2. To express clearly that opinion through a written report that also describes the basis for that opinion.

4. For purposes of this ISA (NZ), the following terms have the meanings attributed below:

1. Applied criteria – The criteria applied by management in the preparation of the summary financial statements.

2. Audited financial statements – Financial statements¹ audited by the auditor in accordance with ISAs (NZ), and from which the summary financial statements are derived.

3. Summary financial statements – 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 at a point in time or the changes therein for a period of time.² Different jurisdictions may use different terminology to describe such historical financial information.

5. The auditor shall accept an engagement to report on summary financial statements in accordance with this ISA (NZ) only when the auditor has been engaged to conduct an audit in accordance with ISAs (NZ) of the financial statements from which the summary financial statements are derived. (Ref: Para. A1)

6. [Amended by the NZAuASB.]

NZ6.1 Before accepting an engagement to report on summary financial statements, the auditor shall: (Ref: Para. A2)

1. Determine whether the applied criteria are acceptable;³ (Ref: Para. A3–A7)

2. Obtain the agreement of those charged with governance that they acknowledge and understand their responsibility:

   1. For the preparation of the summary financial statements in accordance with the applied criteria;

   2. To make the audited financial statements available to the intended users of the summary financial statements without undue difficulty (or, if law or regulation provides that the audited financial statements need not be made available to the intended users of the summary financial statements and establishes the criteria for the preparation of the summary financial statements, to describe that law or regulation in the summary financial statements); and

   3. To include the auditor’s report on the summary financial statements in any document that contains the summary financial statements and that indicates that the auditor has reported on them.

3. Agree with those charged with governance the form of opinion to be expressed on the summary financial statements (see paragraphs 9–11)

7. [Amended by the NZAuASB.]

NZ7.1 If the auditor concludes that the applied criteria are unacceptable or is unable to obtain the agreement of those charged with governance set out in paragraph NZ6.1(b), the auditor shall not accept the engagement to report on the summary financial statements, unless required by law or regulation to do so. An engagement conducted in accordance with such law or regulation does not comply with this ISA (NZ). Accordingly, the auditor’s report on the summary financial statements shall not indicate that the engagement was conducted in accordance with this ISA (NZ). The auditor shall include appropriate reference to this fact in the terms of the engagement. The auditor shall also determine the effect that this may have on the engagement to audit the financial statements from which the summary financial statements are derived.

8. The auditor shall perform the following procedures, and any other procedures that the auditor may consider necessary, as the basis for the auditor’s opinion on the summary financial statements:

1. Evaluate whether the summary financial statements adequately disclose their summarised nature and identify the audited financial statements.

2. When summary financial statements are not accompanied by the audited financial statements, evaluate whether they describe clearly:

   1. From whom or where the audited financial statements are available; or

   2. The law or regulation that specifies that the audited financial statements need not be made available to the intended users of the summary financial statements and establishes the criteria for the preparation of the summary financial statements.

3. Evaluate whether the summary financial statements adequately disclose the applied criteria.

4. Compare the summary financial statements with the related information in the audited financial statements to determine whether the summary financial statements agree with or can be recalculated from the related information in the audited financial statements.

5. Evaluate whether the summary financial statements are prepared in accordance with the applied criteria.

6. Evaluate, in view of the purpose of the summary financial statements, whether the summary financial statements contain the information necessary, and are at an appropriate level of aggregation, so as not to be misleading in the circumstances.

7. Evaluate whether the audited financial statements are available to the intended users of the summary financial statements without undue difficulty, unless law or regulation provides that they need not be made available and establishes the criteria for the preparation of the summary financial statements. (Ref: Para. A8)

9. When the auditor has concluded that an unmodified opinion on the summary financial statements is appropriate, the auditor’s opinion shall, unless otherwise required by law or regulation, use one of the following phrases: (Ref: Para. A9)

1. The accompanying summary financial statements are consistent, in all material respects, with the audited financial statements, in accordance with [the applied criteria]; or

2. The accompanying summary financial statements are a fair summary of the audited financial statements, in accordance with [the applied criteria].

10. If law or regulation prescribes the wording of the opinion on summary financial statements in terms that are different from those described in paragraph 9, the auditor shall:

1. Apply the procedures described in paragraph 8 and any further procedures necessary to enable the auditor to express the prescribed opinion; and

2. Evaluate whether users of the summary financial statements might misunderstand the auditor’s opinion on the summary financial statements and, if so, whether additional explanation in the auditor’s report on the summary financial statements can mitigate possible misunderstanding.

11. If, in the case of paragraph 10(b), the auditor concludes that additional explanation in the auditor’s report on the summary financial statements cannot mitigate possible misunderstanding, the auditor shall not accept the engagement, unless required by law or regulation to do so. An engagement conducted in accordance with such law or regulation does not comply with this ISA (NZ). Accordingly, the auditor’s report on the summary financial statements shall not indicate that the engagement was conducted in accordance with this ISA (NZ).

12. The auditor’s report on the summary financial statements may be dated later than the date of the auditor’s report on the audited financial statements. In such cases, the auditor’s report on the summary financial statements shall state that the summary financial statements and audited financial statements do not reflect the effects of events that occurred subsequent to the date of the auditor’s report on the audited financial statements (Ref: Para. A10)

13. The auditor may become aware of facts that existed at the date of the auditor’s report on the audited financial statements, but of which the auditor previously was unaware. In such cases, the auditor shall not issue the auditor’s report on the summary financial statements until the auditor’s consideration of such facts in relation to the audited financial statements in accordance with ISA (NZ) 560⁴ has been completed.

14. The auditor shall read the information included in a document containing the summary financial statements and the auditor’s report thereon and consider whether there is a material inconsistency between that information and the summary financial statements.

15. If the auditor identifies a material inconsistency, the auditor shall discuss the matter with management and determine whether the summary financial statements or the information included in the document containing the summary financial statements and the auditor’s report thereon needs to be revised. If the auditor determines that the information needs to be revised and management refuses to revise the information as necessary, the auditor shall take appropriate action in the circumstances, including considering the implications for the auditor’s report on the summary financial statements. (Ref: Para. A11-A16)

16. [Amended by the NZAuASB.]

NZ16.1 The auditor’s report on summary financial statements shall include the following elements:⁵ (Ref: Para. A23)

1. A title clearly indicating it as the report of an independent auditor. (Ref: Para. A17)

2. An addressee. (Ref: Para. A18)

3. Identification of the summary financial statements on which the auditor is reporting, including the title of each statement included in the summary financial statements. (Ref: Para. A19)

4. Identification of the audited financial statements.

5. Subject to paragraph 20, a clear expression of an opinion (see paragraphs 9–11).

6. A statement indicating that the summary financial statements do not contain all the disclosures required by the financial reporting framework applied in the preparation of the audited financial statements, and that reading the summary financial statements and the auditor’s report thereon is not a substitute for reading the audited financial statements and the auditor’s report thereon.

7. Where applicable, the statement required by paragraph 12.

8. Reference to the auditor’s report on the audited financial statements, the date of that report, and, subject to paragraphs 19–20, the fact that an unmodified opinion is expressed on the audited financial statements.

   1. A description of those charged with governance’s⁶ responsibility for the summary financial statements, explaining that those charged with governance⁷ are responsible for the preparation of the summary financial statements in accordance with the applied criteria.

9. A statement that the auditor is responsible for expressing an opinion, based on the auditor’s procedures conducted in accordance with this ISA (NZ), on whether the summary financial statements are consistent, in all material respects, with [or are a fair summary of] the audited financial statements.

10. The auditor’s signature.

11. The auditor’s address.

12. The date of the auditor’s report. (Ref: Para. A20)

NZ16.2 The auditor’s report shall include a statement as to the existence of any relationship (other than that of auditor) which the auditor has with, or any interests which the auditor has in, the entity.

17. If the addressee of the summary financial statements is not the same as the addressee of the auditor’s report on the audited financial statements, the auditor shall evaluate the appropriateness of using a different addressee. (Ref: Para. A18)

18. The auditor shall date the auditor’s report on the summary financial statements no earlier than: (Ref: Para. A20)

1. The date on which the auditor has obtained sufficient appropriate evidence on which to base the opinion, including evidence that the summary financial statements have been prepared and those with the recognised authority have asserted that they have taken responsibility for them; and

2. The date of the auditor’s report on the audited financial statements.

19. When the auditor’s report on the audited financial statements includes:

1. A qualified opinion in accordance with ISA (NZ) 705 (Revised);⁸

2. An Emphasis of Matter paragraph, or an Other Matter paragraph in accordance with ISA (NZ) 706 (Revised);⁹

3. A Material Uncertainty Related to Going Concern section in accordance with ISA (NZ) 570 (Revised);¹⁰

4. Communication of key audit matters in accordance with ISA (NZ) 701;¹¹ or

5. A statement that describes an uncorrected material misstatement of the other information in accordance with ISA (NZ) 720 (Revised);¹²

and the auditor is satisfied that the summary financial statements are consistent, in all material respects, with or are a fair summary of the audited financial statements, in accordance with the applied criteria, the auditor’s report on the summary financial statements shall, in addition to the elements in paragraph NZ16.1:

1. State that the auditor’s report on the audited financial statements includes a qualified opinion, an Emphasis of Matter paragraph, an Other Matter paragraph, a Material Uncertainty Related to Going Concern section, communication of key audit matters, or a statement that describes an uncorrected material misstatement of the other information; and (Ref: Para. A21)

2. Describe: (Ref: Para. A22)

a. The basis for the qualified opinion on the audited financial statements and the effect thereof, if any, on the summary financial statements;

b. The matter referred to in the Emphasis of Matter paragraph, the Other Matter paragraph, or the Material Uncertainty Related to Going Concern section in the auditor’s report on the audited financial statements and the effect(s) thereof, if any, on the summary financial statements; or

c. The uncorrected material misstatement of the other information and the effect(s) thereof, if any, on the information included in a document containing the summary financial statements and the auditor’s report thereon. (Ref: Para. A15)

20. When the auditor’s report on the audited financial statements contains an adverse opinion or a disclaimer of opinion, the auditor’s report on the summary financial statements shall, in addition to the elements in paragraph NZ16.1:

1. State that the auditor’s report on the audited financial statements contains an adverse opinion or disclaimer of opinion;

2. Describe the basis for that adverse opinion or disclaimer of opinion; and

3. State that, as a result of the adverse opinion or disclaimer of opinion on the audited financial statements, it is inappropriate to express an opinion on the summary financial statements. (Ref: Para. A23)

21. If the summary financial statements are not consistent, in all material respects, with or are not a fair summary of the audited financial statements, in accordance with the applied criteria, and management does not agree to make the necessary changes, the auditor shall express an adverse opinion on the summary financial statements. (Ref: Para. A23)

22. When distribution or use of the auditor’s report on the audited financial statements is restricted, or the auditor’s report on the audited financial statements alerts readers that the audited financial statements are prepared in accordance with a special purpose framework, the auditor shall include a similar restriction or alert in the auditor’s report on the summary financial statements.

23. If the audited financial statements contain comparatives, but the summary financial statements do not, the auditor shall determine whether such omission is reasonable in the circumstances of the engagement. The auditor shall determine the effect of an unreasonable omission on the auditor’s report on the summary financial statements. (Ref: Para. A24)

24. If the summary financial statements contain comparatives that were reported on by another auditor, the auditor’s report on the summary financial statements shall also contain the matters that ISA (NZ) 710 requires the auditor to include in the auditor’s report on the audited financial statements.¹³ (Ref: Para. A25)

25. The auditor shall evaluate whether any unaudited supplementary information presented with the summary financial statements is clearly differentiated from the summary financial statements. If the auditor concludes that the entity’s presentation of the unaudited supplementary information is not clearly differentiated from the summary financial statements, the auditor shall ask management to change the presentation of the unaudited supplementary information. If management refuses to do so, the auditor shall explain in the auditor’s report on the summary financial statements that such information is not covered by that report. (Ref: Para. A26)

26. If the auditor becomes aware that the entity plans to state that the auditor has reported on summary financial statements in a document containing the summary financial statements, but does not plan to include the related auditor’s report, the auditor shall request management to include the auditor’s report in the document. If management does not do so, the auditor shall determine and carry out other appropriate actions designed to prevent management from inappropriately associating the auditor with the summary financial statements in that document. (Ref: Para. A27)

27. The auditor may be engaged to report on the financial statements of an entity, while not engaged to report on the summary financial statements. If, in this case, the auditor becomes aware that the entity plans to make a statement in a document that refers to the auditor and the fact that summary financial statements are derived from the financial statements audited by the auditor, the auditor shall be satisfied that:

1. The reference to the auditor is made in the context of the auditor’s report on the audited financial statements; and

2. The statement does not give the impression that the auditor has reported on the summary financial statements.

If (a) or (b) are not met, the auditor shall request management to change the statement to meet them, or not to refer to the auditor in the document. Alternatively, the entity may engage the auditor to report on the summary financial statements and include the related auditor’s report in the document. If management does not change the statement, delete the reference to the auditor, or include an auditor’s report on the summary financial statements in the document containing the summary financial statements, the auditor shall advise management that the auditor disagrees with the reference to the auditor, and the auditor shall determine and carry out other appropriate actions designed to prevent management from inappropriately referring to the auditor. (Ref: Para. A27)

A1. The audit of the financial statements from which the summary financial statements are derived provides the auditor with the necessary knowledge to discharge the auditor’s responsibilities in relation to the summary financial statements in accordance with this ISA (NZ). Application of this ISA (NZ) will not provide sufficient appropriate evidence on which to base the opinion on the summary financial statements if the auditor has not also audited the financial statements from which the summary financial statements are derived.

A2. [Amended by the NZAuASB.]

NZA2.1 Those charged with governance’s agreement with the matters described in paragraph NZ6.1 may be evidenced by their written acceptance of the terms of the engagement.

A3. The preparation of summary financial statements requires management to determine the information that needs to be reflected in the summary financial statements so that they are consistent, in all material respects, with or represent a fair summary of the audited financial statements. Because summary financial statements by their nature contain aggregated information and limited disclosure, there is an increased risk that they may not contain the information necessary so as not to be misleading in the circumstances. This risk increases when established criteria for the preparation of summary financial statements do not exist.

A4. Factors that may affect the auditor’s determination of the acceptability of the applied criteria include:

• The nature of the entity;

• The purpose of the summary financial statements;

• The information needs of the intended users of the summary financial statements; and

• Whether the applied criteria will result in summary financial statements that are not misleading in the circumstances.

A5. The criteria for the preparation of summary financial statements may be established by an authorised or recognised standards setting organisation or by law or regulation. Similar to the case of financial statements, as explained in ISA (NZ) 210,¹⁴ in many such cases, the auditor may presume that such criteria are acceptable.

A6. Where established criteria for the preparation of summary financial statements do not exist, criteria may be developed by management, for example, based on practice in a particular industry. Criteria that are acceptable in the circumstances will result in summary financial statements that:

1. Adequately disclose their summarised nature and identify the audited financial statements;

2. Clearly describe from whom or where the audited financial statements are available or, if law or regulation provides that the audited financial statements need not be made available to the intended users of the summary financial statements and establishes the criteria for the preparation of the summary financial statements, that law or regulation;

3. Adequately disclose the applied criteria;

4. Agree with or can be recalculated from the related information in the audited financial statements; and

5. In view of the purpose of the summary financial statements, contain the information necessary, and are at an appropriate level of aggregation, so as not to be misleading in the circumstances.

A7. Adequate disclosure of the summarised nature of the summary financial statements and the identity of the audited financial statements, as referred to in paragraph A6(a), may, for example, be provided by a title such as “Summary Financial Statements Prepared from the Audited Financial Statements for the Year Ended December 31, 20X1.”

A8. The auditor’s evaluation whether the audited financial statements are available to the intended users of the summary financial statements without undue difficulty is affected by factors such as whether:

• The summary financial statements describe clearly from whom or where the audited financial statements are available;

• The audited financial statements are on public record; or

• Management has established a process by which the intended users of the summary financial statements can obtain ready access to the audited financial statements.

A9. A conclusion, based on an evaluation of the evidence obtained by performing the procedures in paragraph 8, that an unmodified opinion on the summary financial statements is appropriate enables the auditor to express an opinion containing one of the phrases in paragraph 9. The auditor’s decision as to which of the phrases to use may be affected by generally accepted practice in the particular jurisdiction.

A10. The procedures described in paragraph 8 are often performed during or immediately after the audit of the financial statements. When the auditor reports on the summary financial statements after the completion of the audit of the financial statements, the auditor is not required to obtain additional audit evidence on the audited financial statements, or report on the effects of events that occurred subsequent to the date of the auditor’s report on the audited financial statements since the summary financial statements are derived from the audited financial statements and do not update them.

A11. ISA (NZ) 720 (Revised) deals with the auditor’s responsibilities relating to other information in an audit of financial statements. In the context of ISA (NZ) 720 (Revised), other information is financial or non-financial information (other than financial statements and the auditor’s report thereon) included in an entity’s annual report. An annual report contains or accompanies the financial statements and the auditor’s report thereon.

A12. In contrast, paragraphs 14–15 deal with the auditor’s responsibilities relating to information included in a document that also contains the summary financial statements and the auditor’s report thereon. This information may include:

• Some or all of the same matters as those dealt with in the other information included in the annual report (e.g., when the summary financial statements and the auditor’s report thereon are included in a summary annual report); or

• Matters that are not dealt with in the other information included in the annual report.

A13. In reading the information included in a document containing the summary financial statements and the auditor’s report thereon, the auditor may become aware that such information is misleading and may need to take appropriate action. Relevant ethical requirements¹⁵ require the auditor to avoid being knowingly associated with information that the auditor believes contains a materially false or misleading statement, statements or information provided recklessly, or omits or obscures required information where such omission or obscurity would be misleading.

A14. When information is included in a document containing the summary financial statements and the auditor’s report thereon and that information deals with some or all of the same matters as the other information included in the annual report, the work performed on that other information in accordance with ISA (NZ) 720 (Revised) may be adequate for the purposes of paragraphs 14–15 of this ISA (NZ).

A15. When an uncorrected material misstatement of the other information has been identified in the auditor’s report on the audited financial statements and that uncorrected material misstatement relates to a matter that is dealt with in the information in a document containing the summary financial statements and the auditor’s report thereon, a material inconsistency between the summary financial statements and that information may exist or the information may be misleading.

A16. ISA (NZ) 720 (Revised), adapted as necessary in the circumstances, may be helpful to the auditor in determining the appropriate action to respond to management’s refusal to make necessary revisions to the information, including considering the implications for the auditor’s report on the summary financial statements.

A17. A title indicating the report is the report of an independent auditor, for example, “Report of the Independent Auditor,” affirms that the auditor has met all of the relevant ethical requirements regarding independence. This distinguishes the report of the independent auditor from reports issued by others.

A18. Factors that may affect the auditor’s evaluation of the appropriateness of the addressee of the summary financial statements include the terms of the engagement, the nature of the entity, and the purpose of the summary financial statements.

A19. When the auditor is aware that the summary financial statements will be included in a document that contains information other than the summary financial statements and the auditor’s report thereon, the auditor may consider, if the form of presentation allows, identifying the page numbers on which the summary financial statements are presented. This helps readers to identify the summary financial statements to which the auditor’s report relates.

A20. The person or persons with recognised authority to conclude that the summary financial statements have been prepared and take responsibility for them depend on the terms of the engagement, the nature of the entity, and the purpose of the summary financial statements.

A21. Paragraph 19(i) of this ISA (NZ) requires the auditor to include a statement in the auditor’s report on the summary financial statements when the auditor’s report on the audited financial statements includes communication of one or more key audit matters described in accordance with ISA (NZ) 701.¹⁶ However, the auditor is not required to describe the individual key audit matters in the auditor’s report on the summary financial statements.

A22. The statement(s) and description(s) required by paragraph 19 are intended to draw attention to those matters and are not a substitute for reading the auditor’s report on the audited financial statements. The required descriptions are intended to convey the nature of the matter(s), and need not repeat the corresponding text in the auditor’s report on the audited financial statements in its entirety.

A23. Appendix 1 to this ISA (NZ) contains illustrations of auditors’ reports on summary financial statements that variously:

1. Contain unmodified opinions;

2. Are derived from audited financial statements on which the auditor issued modified opinions;

3. Contain a modified opinion;

4. Are derived from audited financial statements where the auditor’s report thereon includes a statement describing an uncorrected material misstatement of the other information in accordance with ISA (NZ) 720 (Revised); and

5. Are derived from audited financial statements where the auditor’s report thereon includes a Material Uncertainty Related to Going Concern section and communication of other key audit matters.

A24. If the audited financial statements contain comparatives, there is a presumption that the summary financial statements also would contain comparatives. Comparatives in the audited financial statements may be regarded as corresponding figures or as comparative financial information. ISA (NZ) 710 describes how this difference affects the auditor’s report on the financial statements, including, in particular, reference to other auditors who audited the financial statements for the prior period.

A25. Circumstances that may affect the auditor’s determination whether an omission of comparatives is reasonable include the nature and objective of the summary financial statements, the applied criteria, and the information needs of the intended users of the summary financial statements.

A26. ISA (NZ) 700 (Revised)¹⁷ contains requirements and guidance to be applied when unaudited supplementary information is presented with audited financial statements that, adapted as necessary in the circumstances, may be helpful in applying the requirement in paragraph 25.

A27. Other appropriate actions the auditor may take when management does not take the requested action may include informing the intended users and other known third-party users of the inappropriate reference to the auditor. The auditor’s course of action depends on the auditor’s legal rights and obligations. Consequently, the auditor may consider it appropriate to seek legal advice.