Special Considerations — Audits of Single Financial Statements and

Special Considerations—Audits of Single Financial Statements 1363

AU-C Section 805

Special Considerations — Audits of Single

Financial Statements and Speciﬁc Elements,

Accounts, or Items of a Financial Statement

Source: SAS No. 122; SAS No. 139.

See section 9805 for interpretations of this section.

Effective for audits of single nancial statements or specic elements,

accounts, or items of a nancial statement as of or for periods ending

on or after December 15, 2012, unless otherwise indicated.

Introduction

Scope of This Section

.01 AU-C sections 200–700 apply to an audit of nancial statements and

are to be adapted as necessary in the circumstances when applied to audits of

other historical nancial information. This section addresses special consider-

ations in the application of those AU-C sections to an audit of a single nancial

statement or of a specic element, account, or item of a nancial statement. The

single nancial statement or the specic element, account, or item of a nan-

cial statement may be prepared in accordance with a general or special purpose

framework. If prepared in accordance with a special purpose framework, sec-

tion 800, Special Considerations—Audits of Financial Statements Prepared in

Accordance With Special Purpose Frameworks, also applies to the audit. (Ref:

par. .A1–.A4)

.02 This section does not apply to the report of a component auditor issued

as a result of work performed on the nancial information of a component at

the request of a group engagement team for purposes of an audit of group -

nancial statements (see section 600, Special Considerations—Audits of Group

Financial Statements [Including the Work of Component Auditors]).

.03 This section does not override the requirements of the other AU-C sec-

tions nor does it purport to address all special considerations that may be rel-

evant in the circumstances of the engagement.

Effective Date

.04 This section is effective for audits of single nancial statements or spe-

cic elements, accounts, or items of a nancial statement as of or for periods

ending on or after December 15, 2012.

Objective

.05 The objective of the auditor, when applying generally accepted auditing

standards (GAAS) in an audit of a single nancial statement or of a specic

1364 Special Considerations

element, account, or item of a nancial statement, is to address appropriately

the special considerations that are relevant to

a. the acceptance of the engagement;

b. the planning and performance of that engagement; and

c. forming an opinion and reporting on the single nancial state-

ment or the specic element, account, or item of a nancial state-

ment.

Deﬁnitions

.06 For purposes of this section, reference to

a. an element of a nancial statement or an element means an ele-

ment, account, or item of a nancial statement. (Ref: par. .A5)

b. a single nancial statement or a specic element of a nancial

statement includes the related disclosures. (Ref: par. A2)

[As amended by SAS No. 139, effective for audits of single nancial state-

ments and specic elements, accounts, or items of a nancial statement as of

or for periods ending on or after December 15, 2021. Early application is not

permitted.]

.07 Reference to generally accepted accounting principles (GAAP) in GAAS

means GAAP promulgated by bodies designated by the Council of the AICPA

pursuant to the "Compliance With Standards Rule" (ET sec. 1.310.001) and the

"Accounting Principles Rule" (ET sec. 203 1.320.001) of the AICPA Code of Pro-

fessional Conduct. [Revised, January 2015, to reect conforming changes nec-

essary due to the issuance of the revised AICPA Code of Professional Conduct,

effective December 15, 2014.]

Requirements

Considerations When Accepting the Engagement

Application of GAAS (Ref: par. .A6–.A8)

.08 Section 200, Overall Objectives of the Independent Auditor and the Con-

duct of an Audit in Accordance With Generally Accepted Auditing Standards,

requires the auditor to comply with all AU-C sections relevant to the audit.

the case of an audit of a single nancial statement or a specic element of a -

nancial statement, this requirement applies irrespective of whether the auditor

is also engaged to audit the entity's complete set of nancial statements.

.09 If the auditor is not also engaged to audit the entity's complete set

of nancial statements, the auditor should determine whether the audit of a

single nancial statement or a specic element of those nancial statements

in accordance with GAAS is practicable. The auditor should also determine

whether the auditor will be able to perform procedures on interrelated items,

as required by paragraph .13.

Paragraph .20 of section 200, Overall Objectives of the Independent Auditor and the Conduct of

an Audit in Accordance With Generally Accepted Auditing Standards.

Special Considerations—Audits of Single Financial Statements 1365

Acceptability of the Financial Reporting Framework (Ref: par. .A9–.A13)

.10 Section 210, Terms of Engagement, requires the auditor to determine

the acceptability of the nancial reporting framework applied in the prepara-

tion of the nancial statements.

In the case of an audit of a single nancial

statement or a specic element of a nancial statement, the auditor should

obtain an understanding of

a. the purpose for which the single nancial statement or specic

element of a nancial statement is prepared,

b. the intended users, and

c. the steps taken by management to determine that the application

of the nancial reporting framework is acceptable in the circum-

stances.

.11 The auditor's determination required by paragraph .10 should include

consideration of whether the application of the nancial reporting framework

will result in a presentation that provides adequate disclosures to enable the

intended users to understand the information conveyed in the nancial state-

ment or the specic element and the effect of material transactions and events

on the information conveyed in the nancial statement or the specic element.

Considerations When Planning and Performing the Audit

.12 Section 200 states that GAAS is written in the context of an audit of

nancial statements; it is to be adapted as necessary in the circumstances when

applied to audits of other historical nancial information.

In planning and

performing the audit of a single nancial statement or a specic element of a

nancial statement, the auditor should adapt all AU-C sections relevant to the

audit as necessary in the circumstances of the engagement. (Ref: par. .A14–

.A17)

.13 In the case of an audit of a single nancial statement or a specic ele-

ment of a nancial statement, the auditor should perform procedures on inter-

related items as necessary to meet the objective of the audit. In the case of an

audit of a specic element of a nancial statement (Ref: par. .A18)

a. the auditor should, if the specic element is, or is based upon,

the entity's stockholders' equity or the equivalent, perform proce-

dures necessary to obtain sufcient appropriate audit evidence to

enable the auditor to express an opinion about nancial position,

excluding matters related to classication or disclosure that are

not relevant to the audit of the specic element.

b. the auditor should, if the specic element is, or is based upon, the

entity's net income or the equivalent, perform procedures neces-

sary to obtain sufcient appropriate audit evidence to enable the

auditor to express an opinion about nancial position and results

of operations, excluding matters related to classication or disclo-

sure that are not relevant to the audit of the specic element.

Materiality (Ref: par. .A19)

.14 Section 320, Materiality in Planning and Performing an Audit,re-

quires the auditor to determine, when establishing the overall audit strategy,

materiality for the nancial statements as a whole.

In the case of an audit of

Paragraph .06a of section 210, Terms of Engagement.

Paragraph .02 of section 200.

Paragraph .10 of section 320, Materiality in Planning and Performing an Audit.

1366 Special Considerations

a single nancial statement, the auditor should determine materiality for the

single nancial statement being reported on rather than for the complete set

of nancial statements. In the case of an audit of one or more specic elements

of a nancial statement, the auditor should determine materiality for each in-

dividual element reported on rather than the aggregate of all elements or the

complete set of nancial statements.

Forming an Opinion and Reporting Considerations

.15 When forming an opinion and reporting on a single nancial statement

or a specic element of a nancial statement, the auditor should apply the re-

quirements in section 700, Forming an Opinion and Reporting on Financial

Statements, or section 703, Forming an Opinion and Reporting on Financial

Statements of Employee Benet Plans Subject to ERISA, and when applicable,

section 800, Special Considerations — Audits of Financial Statements Prepared

in Accordance With Special Purpose Frameworks, adapted as necessary in the

circumstances of the engagement. (Ref: par. .A20–.A22) [As amended by SAS

No. 139, effective for audits of single nancial statements and specic elements,

accounts, or items of a nancial statement as of or for periods ending on or after

December 15, 2021. Early application is not permitted.]

Reporting on the Entity’s Complete Set of Financial Statements and a Single

Financial Statement or a Speciﬁc Element of Those Financial Statements

.16 If, in conjunction with an engagement to audit the entity's complete

set of nancial statements, the auditor undertakes an engagement to audit a

single nancial statement or a specic element of a nancial statement, the

auditor should

a. issue a separate auditor's report and express a separate opinion

for each engagement.

b. indicate in the report on a specic element of a nancial state-

ment the date of the auditor's report on the complete set of -

nancial statements and the nature of opinion expressed on those

nancial statements under an appropriate heading.

.17 Except as required by paragraph .21, an audited single nancial state-

ment or an audited specic element of a nancial statement may be published

together with the entity's audited complete set of nancial statements, provided

that the presentation of the single nancial statement or the specic element

is sufciently differentiated from the complete set of nancial statements. The

auditor should also differentiate the report on the single nancial statement or

the specic element of a nancial statement from the report on the complete

set of nancial statements.

.18 If the auditor concludes that the presentation of the audited single -

nancial statement or the audited specic element does not differentiate it suf-

ciently from the complete set of nancial statements, as described in paragraph

.17, the auditor should ask management to remedy the situation. The auditor

should not release the auditor's report containing the opinion on the single -

nancial statement or the specic element of a nancial statement until satised

with the differentiation.

Considering the Implications of Certain Matters Included in the Auditor’s

Report on the Entity’s Complete Set of Financial Statements

.19 If the auditor's report on an entity's complete set of nancial state-

ments includes a modied opinion, an emphasis-of-matter or other-matter

Special Considerations—Audits of Single Financial Statements 1367

paragraph, a going concern section, a communication of key audit matters, or

a statement describing an uncorrected material misstatement of other infor-

mation, the auditor should consider the implications, if any, that these matters

have for the audit of the single nancial statement or for the specic element

of a nancial statement and for the auditor's report thereon. (Ref: par. .A23–

.A26) [As amended by SAS No. 139, effective for audits of single nancial state-

ments and specic elements, accounts, or items of a nancial statement as of

or for periods ending on or after December 15, 2021. Early application is not

permitted.]

Modiﬁcations to the Opinion in the Independent Auditor’s Report

.20 In the case of an audit of a specic element of a nancial statement,

if the auditor's modied opinion on the entity's complete set of nancial state-

ments as a whole is relevant to the audit of the specic element, the auditor

should (Ref: par. .A27–.A29)

a. express an adverse opinion on the specic element when the mod-

ication of the auditor's opinion on the complete set of nancial

statements as a whole arises from a material misstatement in

such nancial statements.

b. disclaim an opinion on the specic element when the modication

of the auditor's opinion on the complete set of nancial statements

as a whole arises from an inability to obtain sufcient appropriate

audit evidence.

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

Entity’s Complete Set of Financial Statements

.21 If the auditor concludes that it is necessary to express an adverse opin-

ion or disclaim an opinion on the entity's complete set of nancial statements

as a whole, an unmodied opinion on a specic element in the same auditor's

report would contradict the adverse opinion or disclaimer of opinion on the en-

tity's complete set of nancial statements as a whole and would be tantamount

to expressing a piecemeal opinion. In the context of a separate audit of a specic

element of those nancial statements, when the auditor nevertheless considers

it appropriate to express an unmodied opinion on that specic element, the

auditor should only do so if

a. that opinion is expressed in an auditor's report that is neither

published together with nor otherwise accompanies the auditor's

report containing the adverse opinion or disclaimer of opinion and

b. the element does not constitute a major portion of the entity's

complete set of nancial statements or the specic element is not,

or is not based upon, the entity's stockholders' equity or net in-

come or the equivalent.

[As amended by SAS No. 139, effective for audits of single nancial state-

ments and specic elements, accounts, or items of a nancial statement as of

or for periods ending on or after December 15, 2021. Early application is not

permitted.]

.22 A single nancial statement is deemed to constitute a major portion

of a complete set of nancial statements. Therefore, the auditor should not ex-

press an unmodied opinion on a single nancial statement of a complete set

of nancial statements if the auditor has expressed an adverse opinion or dis-

claimed an opinion on the complete set of nancial statements as a whole, even

if the auditor's report on the single nancial statement is neither published

1368 Special Considerations

together with nor otherwise accompanies the auditor's report containing the

adverse opinion or disclaimer of opinion. (Ref: par. .A30)

.23 If the auditor's report on an entity's complete set of nancial state-

ments includes an emphasis-of-matter paragraph or an other-matter para-

graph that is relevant to the audit of the single nancial statement or the

specic element, the auditor should include a similar emphasis-of-matter para-

graph or an other-matter paragraph in the auditor's report on the single -

nancial statement or the specic element, in accordance with section 706,

Emphasis-of-Matter Paragraphs and Other-Matter Paragraphs in the Indepen-

dent Auditor's Report. (Ref: par. .A29)

Reporting on an Incomplete Presentation but One That Is Otherwise

in Accordance With Generally Accepted Accounting Principles

(Ref: par. .A31–.A32)

.24 When the auditor reports on an incomplete presentation but one that

is otherwise in accordance with GAAP, the auditor should include an emphasis-

of-matter paragraph

in the auditor's report that

a. states the purpose for which the presentation is prepared and

refers to a note in the nancial statements that describes the ba-

sis of presentation and

b. indicates that the presentation is not intended to be a complete

presentation of the entity's assets, liabilities, revenues, or ex-

penses.

Application and Other Explanatory Material

Scope of This Section (Ref: par. .01 and .06b)

.A1 Section 200 denes the term historical nancial information as infor-

mation expressed in nancial terms regarding a particular entity, derived pri-

marily from that entity's accounting system, about economic events occurring

in past time periods or about economic conditions or circumstances at points

in time in the past. [As amended by SAS No. 139, effective for audits of sin-

gle nancial statements and specic elements, accounts, or items of a nancial

statement as of or for periods ending on or after December 15, 2021. Early ap-

plication is not permitted.]

.A2 Section 200 denes the term nancial statements as a structured rep-

resentation of historical nancial information, including disclosures, intended

to communicate an entity's economic resources or obligations at a point in time

or the changes therein for a period of time in accordance with a nancial report-

ing framework. The term nancial statements ordinarily refers to a complete set

of nancial statements as determined by the requirements of the applicable -

nancial reporting framework, but can also refer to a single nancial statement.

[Paragraph renumbered and amended by SAS No. 139, effective for audits of

single nancial statements and specic elements, accounts, or items of a nan-

cial statement as of or for periods ending on or after December 15, 2021. Early

application is not permitted.]

Paragraphs .06–.07 of section 706, Emphasis-of-Matter Paragraphs and Other-Matter Para-

graphs in the Independent Auditor's Report.

Paragraph .14 of section 200.

Special Considerations—Audits of Single Financial Statements 1369

.A3 Paragraph .A9 of section 200 provides guidance on what constitutes a

complete set of nancial statements and also provides the following examples

of single nancial statements, each of which would include related disclosures:

•

Balance sheet

•

Statement of income or statement of operations

•

Statement of retained earnings

•

Statement of cash ows

•

Statement of assets and liabilities

•

Statement of changes in owner's equity

•

Statement of revenue and expenses

•

Statement of operations by product lines

[Paragraph renumbered and amended by SAS No. 139, effective for audits of

single nancial statements and specic elements, accounts, or items of a nan-

cial statement as of or for periods ending on or after December 15, 2021. Early

application is not permitted.]

.A4 An attest engagement other than an audit of historical nancial in-

formation is performed in accordance with Statements on Standards for Attes-

tation Engagements. For example, AT-C section 215, Agreed-Upon Procedures

Engagements, applies when reporting on the results of applying agreed-upon

procedures to one or more specic elements of a nancial statement, and AT-C

section 210, Review Engagements, provides guidance when reporting on a re-

view of one or more specic elements of a nancial statement. Paragraph .A8

describes circumstances in which an engagement performed in accordance with

the attestation standards may be more practicable than an audit performed in

accordance with this section. [Revised, April 2017, to reect conforming changes

necessary due to the issuance of SSAE No. 18. Paragraph renumbered and

amended by SAS No. 139, effective for audits of single nancial statements and

specic elements, accounts, or items of a nancial statement as of or for periods

ending on or after December 15, 2021. Early application is not permitted.]

Deﬁnitions

Element of a Financial Statement (Ref: par. .06)

.A5 The appendix, "Examples of Specic Elements, Accounts, or Items of

a Financial Statement," lists examples of an element of a nancial statement.

[Paragraph renumbered by the issuance of SAS No. 139, March 2020.]

Considerations When Accepting the Engagement

Application of GAAS (Ref: par. .08–.09)

.A6 Section 200 requires the auditor to comply with (a) relevant ethical re-

quirements relating to nancial statement audit engagements and (b) all AU-C

sections relevant to the audit. It also requires the auditor to comply with each

requirement of an AU-C section, unless, in the circumstances of the audit, the

entire AU-C section is not relevant or the requirement is not relevant because it

is conditional and the condition does not exist. In rare circumstances, the audi-

tor may judge it necessary to depart from a relevant presumptively mandatory

requirement in an AU-C section by performing alternative audit procedures

1370 Special Considerations

to achieve the intent of that requirement.

[Paragraph renumbered by the is-

suance of SAS No. 139, March 2020.]

Complying With Relevant Requirements

.A7 Compliance with the requirements of AU-C sections relevant to the

audit of a single nancial statement or a specic element of a nancial state-

ment may not be practicable when the auditor is not also engaged to audit the

entity's complete set of nancial statements. In such cases, the auditor often

does not have the same understanding of the entity and its environment, in-

cluding its internal control, as an auditor who also audits the entity's complete

set of nancial statements. The auditor also does not have the audit evidence

about the general quality of the accounting records or other accounting informa-

tion that would be acquired in an audit of the entity's complete set of nancial

statements. Accordingly, the auditor may need further evidence to corroborate

audit evidence acquired from the accounting records. Also see paragraph .A18.

[Paragraph renumbered by the issuance of SAS No. 139, March 2020.]

.A8 In the case of an audit of a specic element of a nancial statement,

certain AU-C sections require audit work that may be disproportionate to the

specic element being audited. For example, although the requirements of sec-

tion 570, The Auditor's Consideration of an Entity's Ability to Continue as a Go-

ing Concern, may be relevant in the circumstances of an audit of a schedule of

accounts receivable (see paragraph .A14), complying with those requirements

may not be practicable because of the audit effort required. If the auditor con-

cludes that an audit of a single nancial statement or a specic element of a

nancial statement in accordance with GAAS may not be practicable, the audi-

tor may discuss with management whether another type of engagement might

be more practicable, such as an engagement performed in accordance with the

Statements on Standards for Attestation Engagements, as described in para-

graph .A4. [Revised, August 2012, to reect conforming changes necessary due

to the issuance of SAS No. 126. Paragraph renumbered and amended by SAS

No. 139, effective for audits of single nancial statements and specic elements,

accounts, or items of a nancial statement as of or for periods ending on or after

December 15, 2021. Early application is not permitted.]

Acceptability of the Financial Reporting Framework (Ref: par. .10–.11)

.A9 In the case of an audit of a single nancial statement or a specic

element of a nancial statement, the nancial information needs of the in-

tended users are relevant in determining the acceptability of the nancial re-

porting framework applied in the preparation of the single nancial statement

or the specic element. [Paragraph renumbered by the issuance of SAS No.

139, March 2020.]

.A10 A single nancial statement or a specic element of a nancial state-

ment may be prepared in accordance with relevant requirements of a nancial

reporting framework established by an authorized or recognized standards-

setting organization for the preparation of a complete set of nancial state-

ments (for example, accounting principles generally accepted in the United

States of America [U.S. GAAP] or International Financial Reporting Standards

promulgated by the International Accounting Standards Board). If this is the

case, determination of the acceptability of the applicable framework may in-

volve considering whether that framework includes all the requirements of the

framework that are relevant to the presentation of a single nancial statement

Paragraphs .16, .20, and .24–.26 of section 200.

Special Considerations—Audits of Single Financial Statements 1371

or a specic element of a nancial statement that provides adequate disclo-

sures. [Paragraph renumbered and amended by SAS No. 139, effective for au-

dits of single nancial statements and specic elements, accounts, or items of

a nancial statement as of or for periods ending on or after December 15, 2021.

Early application is not permitted.]

.A11 The determination of the acceptability of the applicable framework

may also include consideration of the following:

•

Whether the applicable nancial reporting framework is explic-

itly or implicitly restricted to the preparation of a complete set of

nancial statements.

•

Whether the single nancial statement or the specic element of

a nancial statement will

— comply fully with each of those requirements of the frame-

work relevant to the particular nancial statement or the

particular element and the presentation of the nancial

statement or the specic element of a nancial statement,

including the related disclosures. For example, when re-

porting on a schedule of long-term debt prepared in accor-

dance with U.S.GAAP relevant to that schedule, the sched-

ule of long-term debt, including the related notes, would

be comparable to such information in nancial statements

prepared in accordance with U.S. GAAP.

— provide, if necessary to achieve fair presentation, disclo-

sures beyond those specically required by the framework

or, in extremely rare circumstances, depart from a require-

ment of the framework.

A single nancial statement or

a specic element of a nancial statement, including the

related notes, that achieves a fair presentation includes

all informative disclosures that are appropriate for the ap-

plicable nancial reporting framework, including matters

that affect their use, understanding, and interpretation.

[Paragraph renumbered and amended by SAS No. 139, effective for audits of

single nancial statements and specic elements, accounts, or items of a nan-

cial statement as of or for periods ending on or after December 15, 2021. Early

application is not permitted.]

.A12 The auditor may be requested to audit an incomplete presentation

but one that is otherwise in accordance with GAAP. For example, an entity

wishing to sell a division or product line may present certain assets and lia-

bilities, revenues, and expenses relating to the division or product line being

sold. Incomplete presentations may also be required by a regulatory agency or

a contract or an agreement. For example, a regulatory agency may require a

schedule of gross income and certain expenses of an entity's real estate oper-

ation in which income and expenses are measured in accordance with GAAP,

but expenses are dened to exclude certain items, such as interest, deprecia-

tion, and income taxes. Also, an acquisition agreement may specify a schedule

of gross assets and liabilities of the entity measured in accordance with GAAP

but limited to the assets to be sold and liabilities to be transferred pursuant to

the agreement. These types of presentations are generally regarded as single

nancial statements, even though certain items may be excluded only to the

extent necessary to meet the purpose for which they were prepared. The re-

quirement in paragraph .24 is designed to avoid misunderstandings about the

See paragraph .14 of section 200 for a denition of nancial reporting framework.

1372 Special Considerations

purpose for which the presentation is prepared. [Paragraph renumbered by the

issuance of SAS No. 139, March 2020.]

.A13 As indicated in paragraph .A12, incomplete presentations may be re-

quired by a regulatory agency or a contract or an agreement. Paragraphs .A2–

.A3 of section 800 provide guidance on the acceptability of the nancial report-

ing framework when the regulatory or contractual basis of accounting is based

on a general purpose framework, such as GAAP. The auditor may determine

that it is more appropriate for the description of the applicable nancial re-

porting framework to refer to the regulatory or contractual basis of accounting,

rather than make reference to GAAP. As indicated in paragraph .01, if the pre-

sentation is prepared in accordance with a special purpose framework, section

800 also applies to the audit. [Paragraph renumbered and amended by SAS No.

139, effective for audits of single nancial statements and specic elements, ac-

counts, or items of a nancial statement as of or for periods ending on or after

December 15, 2021. Early application is not permitted.]

Considerations When Planning and Performing the Audit

(Ref: par. .12–.13)

.A14 An AU-C section is relevant to the audit when the AU-C section is

in effect and the circumstances addressed by the AU-C section exist.

Even

when only a specic element of a nancial statement is the subject of the au-

dit, AU-C sections such as section 240, Consideration of Fraud in a Financial

Statement Audit, section 550, Related Parties, and section 570 are, in principle,

relevant. This is because the specic element could be misstated as a result of

fraud, the effect of related party transactions, or the incorrect application of

the going concern assumption under the applicable nancial reporting frame-

work. [Revised, August 2012, to reect conforming changes necessary due to

the issuance of SAS No. 126. Paragraph renumbered and amended by SAS No.

139, effective for audits of single nancial statements and specic elements, ac-

counts, or items of a nancial statement as of or for periods ending on or after

December 15, 2021. Early application is not permitted.]

.A15 Section 260, The Auditor's Communication With Those Charged With

Governance, requires the auditor to determine the appropriate person or per-

sons within the entity's governance structure with whom to communicate. Sec-

tion 260 notes that, in some cases, all of those charged with governance are

involved in managing the entity, and the application of communication require-

ments is modied to recognize this circumstance. When a complete set of nan-

cial statements is also prepared by the entity, the person or persons responsible

for oversight of the preparation of the single nancial statement or the element

may not be the same as those responsible for the oversight of the preparation of

the complete set of nancial statements. [Paragraph added by SAS No. 139, ef-

fective for audits of single nancial statements and specic elements, accounts,

or items of a nancial statement as of or for periods ending on or after December

15, 2021. Early application is not permitted.]

.A16 Furthermore, GAAS is written in the context of an audit of nan-

cial statements; it is to be adapted as necessary in the circumstances when

applied to the audit of a single nancial statement or a specic element of a

nancial statement.

For example, written representations from management

about the complete set of nancial statements would be replaced by written

Paragraph .20 of section 200.

Paragraph .02 of section 200.

Special Considerations—Audits of Single Financial Statements 1373

representations about the presentation of the single nancial statement or the

specic element, in accordance with the applicable nancial reporting frame-

work. [Paragraph renumbered by the issuance of SAS No. 139, March 2020.]

.A17 Matters included in the auditor's report on the complete set of -

nancial statements may have implications for the audit of a single nancial

statement or of an element of a nancial statement (see paragraph .19). When

planning and performing an audit of a single nancial statement or a specic

element of a nancial statement in conjunction with the audit of the entity's

complete set of nancial statements, the auditor may use audit evidence ob-

tained as part of the audit of the entity's complete set of nancial statements in

the audit of the single nancial statement or the specic element. GAAS, how-

ever, requires the auditor to plan and perform the audit of the single nancial

statement or specic element to obtain sufcient appropriate audit evidence

on which to base the opinion on the single nancial statement or the specic

element. [Paragraph renumbered and amended by SAS No. 139, effective for

audits of single nancial statements and specic elements, accounts, or items

of a nancial statement as of or for periods ending on or after December 15,

2021. Early application is not permitted.]

.A18 The individual nancial statements that make up a complete set of

nancial statements, and many of the specic elements of those nancial state-

ments, including their related disclosures, are interrelated. For example, sales

and receivables, inventory and payables, and buildings and equipment and de-

preciation each are interrelated. Accordingly, when auditing a single nancial

statement or a specic element of a nancial statement, the auditor may not be

able to consider the single nancial statement or the specic element in isola-

tion. Consequently, paragraph .13 requires the auditor to perform procedures

on interrelated items as necessary to meet the objective of the audit. In the case

of an audit of a specic element that is, or is based upon, the entity's stockhold-

ers' equity or net income (or the equivalents thereto), paragraph .13 requires

the auditor to perform procedures necessary to obtain sufcient appropriate

audit evidence about nancial position, or nancial position and results of op-

erations, respectively, because of the interrelationship between the specic ele-

ment and the balance sheet accounts and the income statement accounts. How-

ever, matters related to classication or disclosure may not be relevant to the

audit of the specic element; therefore, audit procedures on such matters may

not be necessary in an audit of a specic element. [Paragraph renumbered and

amended by SAS No. 139, effective for audits of single nancial statements and

specic elements, accounts, or items of a nancial statement as of or for periods

ending on or after December 15, 2021. Early application is not permitted.]

Materiality (Ref: par. .14)

.A19 The materiality determined for a single nancial statement or a spe-

cic element of a nancial statement differs from the materiality determined

for the entity's complete set of nancial statements; this will affect the nature,

timing, and extent of the audit procedures and the evaluation of uncorrected

misstatements. In the case of an audit of a single nancial statement, para-

graph .14 requires the auditor to determine materiality for the single nancial

statement being reported on rather than for the complete set of nancial state-

ments. In the case of an audit of one or more specic elements of a nancial

statement, the auditor's opinion is on each of the specic elements; therefore,

paragraph .14 requires the auditor to determine materiality for each individual

element reported on rather than the aggregate of all elements or the complete

set of nancial statements. Consequently, an audit of one or more specic el-

ements of a nancial statement is usually more extensive than if the same

information was being considered in conjunction with an audit of the complete

1374 Special Considerations

set of nancial statements. [Paragraph renumbered by the issuance of SAS No.

139, March 2020.]

Forming an Opinion and Reporting Considerations

(Ref: par. .15)

.A20 Sections 700 and 703 require the auditor, in forming an opinion, to

evaluate whether the nancial statements provide adequate disclosures to en-

able the intended users to understand the effect of material transactions and

events on the information conveyed in the nancial statements.

In the case

of an audit of a single nancial statement or a specic element of a nancial

statement, it is important, in view of the requirements of the applicable -

nancial reporting framework, that the disclosures enable the intended users to

understand

•

the information conveyed in the nancial statement or the specic

element and

•

the effect of material transactions and events on the information

conveyed in the nancial statement or the specic element.

[Paragraph renumbered and amended by SAS No. 139, effective for audits of

single nancial statements and specic elements, accounts, or items of a nan-

cial statement as of or for periods ending on or after December 15, 2021. Early

application is not permitted.]

Going Concer n

.A21 The applicable nancial reporting framework may not specically ad-

dress whether management is required to make a going concern assessment for

a single nancial statement or a specic element, account, or item of a nancial

statement. Therefore, the description in the auditor's report of management's

responsibilities relating to going concern

may not be relevant or may need

to be adapted as necessary. The description in the auditor's report of the au-

ditor's responsibilities

relating to going concern may also need to be adapted

as necessary depending on whether section 570 is determined to be relevant

to the audit in accordance with paragraph .12. In making that determination,

the auditor may consider whether the auditor's responsibilities relating to go-

ing concern are likely to be relevant to users for the intended purpose of the

single nancial statement or specic element, account, or item of a nancial

statement presented. [Paragraph added by SAS No. 139, effective for audits of

single nancial statements and specic elements, accounts, or items of a nan-

cial statement as of or for periods ending on or after December 15, 2021. Early

application is not permitted.]

.A22 The exhibit, "Illustrations of Auditor's Reports on a Single Finan-

cial Statement and a Specic Element of a Financial Statements," contains

Paragraph .15 of section 700, Forming an Opinion and Reporting on Financial Statements,

and paragraph .37 of section 703. [As amended by SAS No. 139, effective for audits of single nancial

statements and specic elements, accounts, or items of a nancial statement as of or for periods ending

on or after December 15, 2021. Early application is not permitted.]

Paragraph .32b of section 700. [Footnote added by SAS No. 139, effective for audits of single

nancial statements and specic elements, accounts, or items of a nancial statement as of or for

periods ending on or after December 15, 2021. Early application is not permitted.]

Paragraph .36e of section 700. [Footnote added by SAS No. 139, effective for audits of single

nancial statements and specic elements, accounts, or items of a nancial statement as of or for

periods ending on or after December 15, 2021. Early application is not permitted.]

Special Considerations—Audits of Single Financial Statements 1375

illustrations of auditor's reports. [Paragraph renumbered by the issuance of

SAS No. 139, March 2020.]

Considering the Implications of Certain Matters Included in the

Auditor’s Report on the Entity’s Complete Set of Financial Statements

(Ref: par. .19–.23)

.A23 Considering whether a matter included in the auditor's report on the

complete set of nancial statements is relevant in the context of an engage-

ment to report on a single nancial statement or a specic element of a nan-

cial statement involves professional judgment. [Paragraph added by SAS No.

139, effective for audits of single nancial statements and specic elements, ac-

counts, or items of a nancial statement as of or for periods ending on or after

December 15, 2021. Early application is not permitted.]

.A24 Factors that may be relevant in considering those implications in-

clude the following:

•

The nature of the matters described in the auditor's report on the

complete set of nancial statements and the extent to which they

relate to what is included in the single nancial statement or a

specic element of a nancial statement

•

The pervasiveness of the matters described in the auditor's report

on the complete set of nancial statements

•

The nature and extent of the differences between the applicable

nancial reporting frameworks

•

The extent of the difference between the periods covered by the

complete set of the nancial statements compared with the pe-

riods or dates of the single nancial statement or element of a

nancial statement

•

The time elapsed since the date of the auditor's report on the com-

plete set of the nancial statements

[Paragraph added by SAS No. 139, effective for audits of single nancial state-

ments and specic elements, accounts, or items of a nancial statement as of

or for periods ending on or after December 15, 2021. Early application is not

permitted.]

.A25 When applicable, key audit matters communicated in the auditor's

report on a complete set of nancial statements may have implications for an

audit of a single nancial statement or specic element of a nancial state-

ment. The information included in the "Key Audit Matters" section about how

the matter was addressed in the audit of a complete set of nancial statements

may be useful to the auditor's determination of how to address the matter when

it is relevant to an audit of a single nancial statement or specic element of

a nancial statement. [Paragraph added by SAS No. 139, effective for audits of

single nancial statements and specic elements, accounts, or items of a nan-

cial statement as of or for periods ending on or after December 15, 2021. Early

application is not permitted.]

.A26 If the auditor is engaged to communicate key audit matters in the au-

ditor's report on a single nancial statement or a specic element of a nancial

statement, section 701, Communicating Key Audit Matters in the Independent

Auditor's Report, applies in its entirety. [Paragraph added by SAS No. 139, ef-

fective for audits of single nancial statements and specic elements, accounts,

1376 Special Considerations

or items of a nancial statement as of or for periods ending on or after December

15, 2021. Early application is not permitted.]

Modiﬁcations to the Opinion in the Independent Auditor’s Report

(Ref: par. .20 and .23)

.A27 In the case of an audit of a specic element of a nancial statement, if

the opinion in the auditor's report on an entity's complete set of nancial state-

ments is modied and the modication is relevant to the audit of the specic

element, the modication is material and pervasive with respect to the specic

element. Modications related to an interrelated item of the specic element

may also be relevant to the audit of the specic element. Conversely, modi-

cations related solely to classication or disclosure may not be relevant to the

audit of the specic element. [Paragraph renumbered by the issuance of SAS

No. 139, March 2020.]

.A28 For example, when there is a qualication of the auditor's opinion

in relation to accounts receivable in the auditor's report on the complete set

of nancial statements and the single nancial statement includes accounts

receivable or the specic element of a nancial statement relates to accounts

receivable, there likely would be implications for the audit. On the other hand,

if the qualication of the auditor's opinion on the complete set of nancial state-

ments relates to classication of long-term debt, then it is less likely that there

would be implications for an audit of the single nancial statement that is the

income statement, or if the specic element of the nancial statement relates

to accounts receivable. [Paragraph added by SAS No. 139, effective for audits of

single nancial statements and specic elements, accounts, or items of a nan-

cial statement as of or for periods ending on or after December 15, 2021. Early

application is not permitted.]

.A29 Even when certain matters included in the auditor's report on the

entity's complete set of nancial statements do not have implications for the

audit of, or for the auditor's report on, the single nancial statement or

the specic element of a nancial statement, the auditor may deem it appropri-

ate to refer to the matter in an other-matter paragraph in an auditor's report on

the single nancial statement or on the specic element of a nancial statement

(see section 706). For example, the auditor may consider it appropriate to refer

in the auditor's report on the single nancial statement or the specic element

of a nancial statement to a going concern section included in the auditor's re-

port on the complete set of nancial statements. [Paragraph renumbered and

amended by SAS No. 139, effective for audits of single nancial statements and

specic elements, accounts, or items of a nancial statement as of or for periods

ending on or after December 15, 2021. Early application is not permitted.]

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

Entity’s Complete Set of Financial Statements (Ref: par. .22)

.A30 In the auditor's report on an entity's complete set of nancial state-

ments, the expression of a disclaimer of opinion regarding the results of opera-

tions and cash ows, when relevant, and an unmodied opinion regarding the

nancial position are permitted because the disclaimer of opinion is being is-

sued on the results of operations and cash ows only and not on the nancial

statements as a whole.

[Paragraph renumbered by the issuance of SAS No.

139, March 2020.]

Paragraph .A17 of section 510, Opening Balances—Initial Audit Engagements, Including Reau-

dit Engagements, and paragraph .A17 of section 705, Modications to the Opinion in the Independent

Auditor's Report. [Footnote renumbered by the issuance of SAS No. 139, March 2020.]

Special Considerations—Audits of Single Financial Statements 1377

Reporting on an Incomplete Presentation but One That Is Otherwise in

Accordance With GAAP (Ref: par. .24)

.A31 As described in paragraph .A12, the auditor may be requested to au-

dit an incomplete presentation but one that is otherwise in accordance with

GAAP. When the auditor reports on an incomplete presentation but one that

is otherwise in accordance with GAAP, paragraph .24 requires the auditor to

include an emphasis-of-matter paragraph in the auditor's report, which alerts

users as to the purpose of the presentation and that the presentation is incom-

plete. The exhibit illustrates such a paragraph. [Paragraph renumbered by the

issuance of SAS No. 139, March 2020.]

.A32 If the presentation is prepared in accordance with a regulatory or

contractual basis of accounting, the requirement in paragraph .24 does not

apply. In such circumstances, refer to section 800, Special Considerations —

Audits of Financial Statements Prepared in Accordance With Special Purpose

Frameworks. See also paragraph .A13 of this section. [Paragraph renumbered

and amended by SAS No. 139, effective for audits of single nancial statements

and specic elements, accounts, or items of a nancial statement as of or for pe-

riods ending on or after December 15, 2021. Early application is not permitted.]

1378 Special Considerations

.A33

Appendix — Examples of Speciﬁc Elements, Accounts,

or Items of a Financial Statement (Ref: par. .A5)

The following are examples of specic elements, accounts, or items of a nancial

statement:

•

Accounts receivable; allowance for doubtful accounts receivable;

inventory; the liability for accrued benets of a private benet

plan; the recorded value of identied intangible assets; or the lia-

bility for incurred but not reported claims in an insurance portfo-

lio, including related notes

•

A schedule of externally managed assets and income of a private

benet plan, including related notes

•

A schedule of disbursements regarding a lease property, including

related notes

•

A schedule of prot participation or employee bonuses, including

related notes

Special Considerations—Audits of Single Financial Statements 1379

.A34

Exhibit — Illustrations of Auditor’s Reports on a Single

Financial Statement and a Speciﬁc Element of a

Financial Statement (Ref: par. .A22 and .A31)

Illustration 1 — An Auditor's Report on a Single Financial Statement

Prepared in Accordance With a General Purpose Framework

Illustration 2 — An Auditor's Report on a Single Financial Statement

Prepared in Accordance With a Special Purpose Framework

Illustration 3 — An Auditor's Report on a Specic Element, Account, or

Item of a Financial Statement Prepared in Accordance With a General

Purpose Framework

Illustration 4 — An Auditor's Report on a Specic Element, Account, or

Item of a Financial Statement Prepared in Accordance With a Special

Purpose Framework

Illustration 5 — An Auditor's Report on an Incomplete Presentation

but One That Is Otherwise in Accordance With Generally Accepted Ac-

counting Principles

1380 Special Considerations

Illustration 1 — An Auditor’s Report on a Single Financial

Statement Prepared in Accordance With a General Purpose

Framework

Circumstances include the following:

•

Audit of a balance sheet (that is, a single nancial statement).

•

The balance sheet has been prepared by management of the entity

in accordance with accounting principles generally accepted in the

United States of America.

Independent Auditor's Report

[Appropriate Addressee]

Report on the Audit of the Financial Statement

Opinion

We have audited the balance sheet of ABC Company as of December 31, 20X1,

and the related notes (the nancial statement).

In our opinion, the accompanying nancial statement presents fairly, in all ma-

terial respects, the nancial position of ABC Company as of December 31, 20X1,

in accordance with accounting principles generally accepted in the United

States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally ac-

cepted in the United States of America (GAAS). Our responsibilities under

those standards are further described in the Auditor's Responsibilities for the

Audit of the Financial Statement section of our report. We are required to be

independent of ABC Company and to meet our other ethical responsibilities,

in accordance with the relevant ethical requirements relating to our audit. We

believe that the audit evidence we have obtained is sufcient and appropriate

to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statement

Management is responsible for the preparation and fair presentation of the -

nancial statement in accordance with accounting principles generally accepted

in the United States of America, and for the design, implementation, and main-

tenance of internal control relevant to the preparation and fair presentation of

the nancial statement that is free from material misstatement, whether due

to fraud or error.

Auditor’s Responsibilities for the Audit of the Financial Statement

Our objectives are to obtain reasonable assurance about whether the nancial

statement as a whole is free from material misstatement, whether due to fraud

or error, and to issue an auditor's report that includes our opinion. Reasonable

assurance is a high level of assurance but is not absolute assurance and there-

fore is not a guarantee that an audit conducted in accordance with GAAS will

The subtitle "Report on the Audit of the Financial Statements" is unnecessary in circumstances

in which the second subtitle, "Report on Other Legal and Regulatory Requirements," is not applicable.

The auditor may refer to the nancial statement as the balance sheet.

The description of management's responsibilities relating to going concern required by para-

graph .32b of section 700 may not be relevant or may need to be included in this section of the report,

adapted as necessary. See paragraph .A21 of this section. [Footnote added by SAS No. 139, effective for

audits of single nancial statements and specic elements, accounts, or items of a nancial statement

as of or for periods ending on or after December 15, 2021. Early application is not permitted.]

Special Considerations—Audits of Single Financial Statements 1381

always detect a material misstatement when it exists. The risk of not detecting

a material misstatement resulting from fraud is higher than for one result-

ing from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control. Misstatements are con-

sidered material if there is a substantial likelihood that, individually or in the

aggregate, they would inuence the judgment made by a reasonable user based

on the nancial statement.

In performing an audit in accordance with GAAS, we:

•

Exercise professional judgment and maintain professional skep-

ticism throughout the audit.

•

Identify and assess the risks of material misstatement of the -

nancial statement, whether due to fraud or error, and design and

perform audit procedures responsive to those risks. Such proce-

dures include examining, on a test basis, evidence regarding the

amounts and disclosures in the nancial statement.

•

Obtain an understanding of internal control relevant to the audit

in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on

the effectiveness of ABC Company's internal control. Accordingly,

no such opinion is expressed.

•

Evaluate the appropriateness of accounting policies used and the

reasonableness of signicant accounting estimates made by man-

agement, as well as evaluate the overall presentation of the nan-

cial statement.

•

Conclude whether, in our judgment, there are conditions or events,

considered in the aggregate, that raise substantial doubt about

ABC Company's ability to continue as a going concern for a rea-

sonable period of time.

We are required to communicate with those charged with governance regard-

ing, among other matters, the planned scope and timing of the audit, signicant

audit ndings, and certain internal control-related matters that we identied

during the audit.

Report on Other Legal and Regulatory Requirements

[The form and content of this section of the auditor's report would vary depend-

ing on the nature of the auditor's other reporting responsibilities.]

[Signature of the auditor's rm]

[City and state where the auditor's report is issued]

[Date of the auditor's report]

This bullet is included only when the auditor determines that section 570 is relevant to the

audit of the single nancial statement or specic element, account, or item of a nancial statement.

See paragraph .A21. [Footnote added by SAS No. 139, effective for audits of single nancial statements

and specic elements, accounts, or items of a nancial statement as of or for periods ending on or after

December 15, 2021. Early application is not permitted.]

1382 Special Considerations

Illustration 2 — An Auditor’s Report on a Single Financial

Statement Prepared in Accordance With a Special Purpose

Framework

Circumstances include the following:

•

Audit of a statement of cash receipts and disbursements (that is,

a single nancial statement).

•

The nancial statement has been prepared by management of the

entity in accordance with the cash basis of accounting (a special

purpose framework) to respond to a request for cash ow informa-

tion received from a creditor.

•

Management has a choice of nancial reporting frameworks.

Independent Auditor's Report

[Appropriate Addressee]

Report on the Audit of the Financial Statement

Opinion

We have audited the statement of cash receipts and disbursements of ABC

Company for the year ended December 31, 20X1, and the related notes (the

nancial statement).

In our opinion, the accompanying nancial statement presents fairly, in all ma-

terial respects, the cash receipts and disbursements of ABC Company for the

year ended December 31, 20X1, in accordance with the cash basis of accounting

described in Note X.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally ac-

cepted in the United States of America (GAAS). Our responsibilities under

those standards are further described in the Auditor's Responsibilities for the

Audit of the Financial Statement section of our report. We are required to be

independent of ABC Company and to meet our other ethical responsibilities,

in accordance with the relevant ethical requirements relating to our audit. We

believe that the audit evidence we have obtained is sufcient and appropriate

to provide a basis for our audit opinion.

Emphasis of Matter — Basis of Accounting

We draw attention to Note X to the nancial statement, which describes the

basis of accounting. The nancial statement is prepared on the cash basis of

accounting, which is a basis of accounting other than accounting principles gen-

erally accepted in the United States of America. Our opinion is not modied

with respect to this matter.

Section 800, Special Considerations—Audits of Financial Statements Prepared in Accordance

With Special Purpose Frameworks, contains requirements and guidance on the form and content of

nancial statements prepared in accordance with a special purpose framework.

Paragraph .19b of section 800.

The subtitle "Report on the Financial Statement" is unnecessary in circumstances when the

second subtitle, "Report on Other Legal and Regulatory Requirements," is not applicable.

The auditor may refer to the nancial statements as the statement of cash receipts and disburse-

ments.

Another appropriate heading may be used.

Special Considerations—Audits of Single Financial Statements 1383

Responsibilities of Management for the Financial Statement

Management is responsible for the preparation and fair presentation of the -

nancial statement in accordance with the cash basis of accounting described

in Note X, and for determining that the cash basis of accounting is an accept-

able basis for the preparation of the nancial statement in the circumstances.

Management is also responsible for the design, implementation, and mainte-

nance of internal control relevant to the preparation and fair presentation of

the nancial statement that is free from material misstatement, whether due

to fraud or error.

Auditor’s Responsibilities for the Audit of the Financial Statement

Our objectives are to obtain reasonable assurance about whether the nancial

statement as a whole is free from material misstatement, whether due to fraud

or error, and to issue an auditor's report that includes our opinion. Reasonable

assurance is a high level of assurance but is not absolute assurance and there-

fore is not a guarantee that an audit conducted in accordance with GAAS will

always detect a material misstatement when it exists. The risk of not detecting

a material misstatement resulting from fraud is higher than for one resulting

from error, as fraud may involve collusion, forgery, intentional omissions, mis-

representations, or the override of certain internal control. Misstatements are

considered material if there is a substantial likelihood that, individually or in

the aggregate, they would inuence the judgment made by a reasonable user

based on the nancial statement.