Summary financial statements give readers a condensed view of audited financial statements, but an auditor cannot treat them as a shortened version of the original audit report. SA 810 (Revised), Engagements to Report on Summary Financial Statements, creates a separate framework for accepting the work, testing whether the summary faithfully reflects the audited financial statements, and reporting clearly on what the summary does and does not represent.
ICAI issued the revised standard in February 2024, and it applies to engagements to report on summary financial statements for periods beginning on or after 1 April 2024. The current text is in the official SA 810 (Revised) PDF, while ICAI's issuance announcement confirms the applicability date.
What are summary financial statements?
SA 810 describes them as historical financial information derived from audited financial statements that contains less detail while still providing a structured representation consistent with the underlying statements. The summary therefore has a narrower information set, but it must use defined criteria and must not become misleading through excessive aggregation or selective omission.
The engagement is not an audit of a new complete set of financial statements. The auditor reports on whether the condensed information is consistent, in all material respects, with the audited financial statements or is a fair summary of them in accordance with the applied criteria.
Step 1: Decide whether the engagement can be accepted
SA 810 ordinarily expects the auditor reporting on the summary to be the same auditor who audited the financial statements from which it is derived. Before accepting, the auditor evaluates whether management's criteria for preparing the summary are acceptable.
The auditor also obtains management's agreement that management is responsible for preparing the summary under those criteria, making the audited financial statements available to intended users without undue difficulty unless law or regulation provides otherwise, and including the auditor's summary report in a document that says the auditor has reported on the summary.
If the criteria are unacceptable or the required management agreement cannot be obtained, the auditor does not accept an SA 810 engagement unless law or regulation requires otherwise. In that exceptional case, the report should not imply compliance with SA 810.
Step 2: Test how the summary was prepared
The auditor evaluates whether the summary identifies its summarised nature and the audited financial statements from which it was derived. If the audited statements do not accompany the summary, the summary should explain where they are available, unless law or regulation validly provides another route.
The auditor then checks whether the applied criteria are disclosed, compares the summary with the corresponding audited information, and determines whether the figures agree with or can be recalculated from that information. The auditor also evaluates whether the summary contains enough information, at an appropriate level of aggregation, to avoid being misleading.
Step 3: Form the correct opinion
Where an unmodified opinion is appropriate, SA 810 permits wording that the summary financial statements are consistent, in all material respects, with the audited financial statements in accordance with the applied criteria, or that they are a fair summary of the audited financial statements in accordance with those criteria.
The auditor is therefore not re-expressing the original financial-statement opinion. The opinion addresses the relationship between the summary and the audited source information.
What must the summary report make clear?
The report identifies the summary and audited financial statements, expresses the opinion, explains management's responsibility, and describes the auditor's responsibility under SA 810. It must also state that the summary does not contain all disclosures required by the financial reporting framework used for the audited financial statements and that reading the summary is not a substitute for reading the audited financial statements and the original auditor's report.
ICAI's current Engagement and Quality Control Standards repository lists SA 810 (Revised) with the related reporting standards.
How the original audit report affects the summary report
If the audited financial statements had a qualified opinion, Emphasis of Matter paragraph, Other Matter paragraph, Material Uncertainty Related to Going Concern section, key audit matters, or an uncorrected material misstatement of other information, the SA 810 report has to refer to the relevant matter and describe its effect, if any, on the summary or the document containing it.
If the original financial statements carried an adverse opinion or a disclaimer of opinion, the auditor does not issue a normal opinion on the summary. SA 810 requires the summary report to state the nature and basis of that adverse opinion or disclaimer and to state that, because of it, expressing an opinion on the summary is inappropriate.
A separate problem arises when the audited financial statements were acceptable but the summary is not consistent with them or is not a fair summary under the applied criteria. If management refuses the necessary changes, SA 810 requires an adverse opinion on the summary financial statements.
Worked example
Assume a company prepares a four-page financial summary from a complete audited annual report for lenders. The summary reproduces revenue, profit, assets, liabilities and cash-flow totals correctly, but removes a major note explaining a material restriction on the use of cash. If that omission makes the condensed presentation misleading for its purpose, numerical agreement alone is not enough. The auditor should require enough information or explanation to meet the applied criteria and avoid misleading aggregation.
Now assume the original auditor's report also contains a qualified opinion on inventory valuation. Even if the summary numbers agree with the audited financial statements, the SA 810 report should appropriately refer to that qualification and describe its effect, if any, on the summary.
Timing, comparatives and supplementary information
- Later report date: the SA 810 report may be dated after the original audit report, but it then states that the summary and audited financial statements do not reflect events occurring after the date of the original auditor's report.
- Later-discovered facts: if the auditor learns of a fact that existed at the original report date but was previously unknown, the relevant SA 560 consideration is completed before issuing the summary report.
- Comparatives: if the audited financial statements include comparatives but the summary omits them, the auditor considers whether the omission is reasonable. Where summary comparatives were reported on by another auditor, SA 710 considerations also matter.
- Unaudited supplementary information: information presented alongside the summary should be clearly differentiated if it is not covered by the auditor's report.
Practical SA 810 checklist
- Confirm the source: identify the complete audited financial statements from which the summary is derived.
- Check engagement eligibility: confirm the auditor's relationship to the underlying audit and whether SA 810 can be applied.
- Assess the criteria: decide whether management's basis for preparing the summary is acceptable and clearly disclosed.
- Reconcile the numbers: agree or recalculate material summary figures to the audited financial statements.
- Review omissions and aggregation: ask whether a reader could be misled even where the numbers technically agree.
- Review the original audit report: carry forward relevant qualification, emphasis, going-concern, KAM or other-information implications as required.
- Separate unaudited material: clearly distinguish supplementary information outside the scope of the summary report.
- Protect the auditor's association: do not allow a document to imply that the auditor reported on summary financial statements when no such engagement and report exist.
Practical takeaway
SA 810 is not a formatting exercise. The auditor tests the bridge between the condensed presentation and the audited financial statements: acceptable criteria, faithful derivation, sufficient context, non-misleading aggregation and transparent reporting. A summary can reproduce every headline number correctly and still be misleading if it removes context that intended users need.
