HKSA 810 - Engagements to Report on Summary Financial Statements

INTRODUCTION

Scope of this HKSA (Paragraph 1)

HKSA 810 deals with the auditor's responsibilities relating to an engagement to report on summary financial statements derived from financial statements audited in accordance with HKSAs by that same auditor.

Key Point: The auditor must have audited the original financial statements from which the summary financial statements are derived. This standard does not apply to engagements where the auditor has not audited the underlying financial statements.

Effective Date (Paragraph 2)

This HKSA is effective for engagements for periods beginning on or after 15 December 2009.

Note: The standard was issued in October 2009, revised in July 2010 (Update 90), March 2011 (Update 105), and subsequently amended for the Hong Kong Companies Ordinance (Cap. 622) effective 3 March 2014, with conforming amendments for new and revised HKSAs issued in Update 172.

OBJECTIVES (Paragraph 3)

The objectives of the auditor are:

(a) To determine whether it is appropriate to accept the engagement to report on summary financial statements; and

(b) If engaged to report on summary financial statements:

• (i) To form an opinion on the summary financial statements based on an evaluation of the conclusions drawn from the evidence obtained; and
• (ii) To express clearly that opinion through a written report that also describes the basis for that opinion.

DEFINITIONS (Paragraph 4)

For purposes of this HKSA, the following terms have the meanings attributed below:

Term	Definition
------	------------
Applied criteria	The criteria applied by management in the preparation of the summary financial statements
Audited financial statements	Financial statements audited by the auditor in accordance with HKSAs, and from which the summary financial statements are derived
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

Hong Kong Specific Context (Footnote 2a): In Hong Kong, the Companies Ordinance permits a company incorporated in Hong Kong (other than those falling within the reporting exemption under Division 2 of Part 9) to send to every member of the company a summary financial report in place of the reporting documents, including a full set of the annual financial statements, under section 441 of the Companies Ordinance. The form and contents of a summary financial report are set out in sections 3 to 6 of the Companies (Summary Financial Reports) Regulation (Cap. 622E).

REQUIREMENTS

Engagement Acceptance (Paragraphs 5-7)

Paragraph 5 - Prerequisite for Acceptance:

The auditor shall accept an engagement to report on summary financial statements in accordance with this HKSA only when the auditor has been engaged to conduct an audit in accordance with HKSAs of the financial statements from which the summary financial statements are derived.

Ref: Para. 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 HKSA. Application of this HKSA 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.

Paragraph 6 - Pre-acceptance Procedures:

Before accepting an engagement to report on summary financial statements, the auditor shall:

(a) Determine whether the applied criteria are acceptable (Ref: Para. A3-A7);

(b) Obtain the agreement of management that it acknowledges and understands its responsibility:

• (i) For the preparation of the summary financial statements in accordance with the applied criteria;
• (ii) 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
• (iii) 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.

(c) Agree with management the form of opinion to be expressed on the summary financial statements (see paragraphs 9-11).

Paragraph 7 - When Not to Accept:

If the auditor concludes that the applied criteria are unacceptable or is unable to obtain the agreement of management set out in paragraph 6(b), the auditor shall not accept the engagement to report on the summary financial statements, unless required by law or regulation to do so.

Important: An engagement conducted in accordance with such law or regulation does not comply with this HKSA. Accordingly, the auditor's report on the summary financial statements shall not indicate that the engagement was conducted in accordance with this HKSA. 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.

Criteria Acceptability (Ref: Para. A3-A7)

Factors affecting acceptability (Para. A4):

• The nature of the entity
• The purpose of the summary financial statements
• The information needs of the intended users of the summary financial statements
• Whether the applied criteria will result in summary financial statements that are not misleading in the circumstances

Criteria established by authorized bodies (Para. A5):

The criteria for the preparation of summary financial statements may be established by an authorized or recognized standards setting organization or by law or regulation. Similar to the case of financial statements, as explained in HKSA 210, in many such cases, the auditor may presume that such criteria are acceptable.

Criteria developed by management (Para. 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:

• (a) Adequately disclose their summarized nature and identify the audited financial statements;
• (b) 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;
• (c) Adequately disclose the applied criteria;
• (d) Agree with or can be recalculated from the related information in the audited financial statements; and
• (e) 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.

Adequate disclosure (Para. A7):

Adequate disclosure of the summarized nature of the summary financial statements and the identity of the audited financial statements may, for example, be provided by a title such as "Summary Financial Statements Prepared from the Audited Financial Statements for the Year Ended 31 December 20X1."

Nature of Procedures (Paragraph 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:

Procedure	Description
-----------	-------------
(a)	Evaluate whether the summary financial statements adequately disclose their summarized nature and identify the audited financial statements
(b)	When summary financial statements are not accompanied by the audited financial statements, evaluate whether they describe clearly: (i) From whom or where the audited financial statements are available; or (ii) 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
(c)	Evaluate whether the summary financial statements adequately disclose the applied criteria
(d)	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
(e)	Evaluate whether the summary financial statements are prepared in accordance with the applied criteria
(f)	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
(g)	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

Evaluating Availability of Audited Financial Statements (Ref: Para. 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.

Form of Opinion (Paragraphs 9-11)

Paragraph 9 - Unmodified Opinion Wording:

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:

(a) The summary financial statements are consistent, in all material respects, with the audited financial statements, in accordance with [the applied criteria]; or

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(b) The summary financial statements are a fair summary of the audited financial statements, in accordance with [the applied criteria].

Paragraph 10 - Law or Regulation Prescribes Different Wording:

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:

• (a) Apply the procedures described in paragraph 8 and any further procedures necessary to enable the auditor to express the prescribed opinion; and
• (b) 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.

Paragraph 11 - When Misunderstanding Cannot Be Mitigated:

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.

Important: An engagement conducted in accordance with such law or regulation does not comply with this HKSA. Accordingly, the auditor's report on the summary financial statements shall not indicate that the engagement was conducted in accordance with this HKSA.

Ref: Para. A9 - Choosing Between Phrases:

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.

Timing of Work and Events Subsequent to the Date of the Auditor's Report on the Audited Financial Statements (Paragraphs 12-13)

Paragraph 12 - Dating the Report:

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 that may require adjustment of, or disclosure in, the audited financial statements.

Paragraph 13 - Subsequent Discovery of Facts:

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 HKSA 560 has been completed.

Ref: Para. A10 - Practical Considerations:

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.

Hong Kong Specific Guidance (Footnote 2e): For reporting under footnote 2a, the auditor normally carries out his/her work on the summary financial report at the same time as completing the annual audit rather than after its completion, so that the auditor's report on the summary report and the auditor's report on the annual financial statements can be issued at the same time. The auditor therefore encourages the directors to take this into account when they are planning the timetable for the preparation of the annual financial statements.

Auditor's Report on Summary Financial Statements (Paragraphs 14-19)

Elements of the Auditor's Report (Paragraph 14)

The auditor's report on summary financial statements shall include the following elements:

Element	Description	Reference
---------	-------------	-----------
(a)	A title clearly indicating it as the report of an independent auditor	Para. A11
(b)	An addressee	Para. A12
(c)	An introductory paragraph that:	Para. A13
	(i) Identifies the summary financial statements on which the auditor is reporting, including the title of each statement included in the summary financial statements
	(ii) Identifies the audited financial statements
	(iii) Refers to the auditor's report on the audited financial statements, the date of that report, and, subject to paragraphs 17-18, the fact that an unmodified opinion is expressed on the audited financial statements
	(iv) If the date of the auditor's report on the summary financial statements is later than the date of the auditor's report on the audited financial statements, states that the summary financial statements and the 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
	(v) 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 is not a substitute for reading the audited financial statements
(d)	A description of management's responsibility for the summary financial statements, explaining that management is responsible for the preparation of the summary financial statements in accordance with the applied criteria
(e)	A statement that the auditor is responsible for expressing an opinion on the summary financial statements based on the procedures required by this HKSA
(f)	A paragraph clearly expressing an opinion (see paragraphs 9-11)
(g)	The auditor's signature
(h)	The date of the auditor's report	Para. A14
(i)	The auditor's address

Paragraph 15 - Different Addressee:

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.

Paragraph 16 - Dating Requirements:

The auditor shall date the auditor's report on the summary financial statements no earlier than:

• (a) 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 recognized authority have asserted that they have taken responsibility for them; and
• (b) The date of the auditor's report on the audited financial statements.

Hong Kong Specific Guidance (Footnote 6a): For reporting under footnote 2a, since the auditor's responsibility is to report on the summary financial report as prepared by the directors, the auditor would not date the auditor's report on the summary financial report earlier than the date on which the summary financial report is approved by the directors.

Title (Ref: Para. A11)

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.

Addressee (Ref: Para. A12)

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.

Introductory Paragraph (Ref: Para. A13)

When the auditor is aware that the summary financial statements will be included in a document that contains other information, 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.

Date of the Auditor's Report (Ref: Para. A14)

The person or persons with recognized 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.

Modifications to the Opinion, Emphasis of Matter Paragraph or Other Matter Paragraph in the Auditor's Report on the Audited Financial Statements (Paragraphs 17-18)

Paragraph 17 - Qualified Opinion, Emphasis of Matter, or Other Matter in Audited Financial Statements:

When the auditor's report on the audited financial statements contains a qualified opinion, an Emphasis of Matter paragraph, or an Other Matter paragraph, but 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 14:

• (a) State that the auditor's report on the audited financial statements contains a qualified opinion, an Emphasis of Matter paragraph, or an Other Matter paragraph; and
• (b) Describe:
• (i) The basis for the qualified opinion on the audited financial statements, and that qualified opinion; or the Emphasis of Matter or the Other Matter paragraph in the auditor's report on the audited financial statements; and
• (ii) The effect thereof on the summary financial statements, if any.

Paragraph 18 - Adverse Opinion or Disclaimer of Opinion in Audited Financial Statements:

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 14:

• (a) State that the auditor's report on the audited financial statements contains an adverse opinion or disclaimer of opinion;
• (b) Describe the basis for that adverse opinion or disclaimer of opinion; and
• (c) State that, as a result of the adverse opinion or disclaimer of opinion, it is inappropriate to express an opinion on the summary financial statements.

Hong Kong Specific Guidance (Footnote 6b): Section 4(1) of the Companies (Summary Financial Reports) Regulation requires that a summary financial report of a company must contain a statement from the company's auditor as to whether the auditor's report for that financial year is qualified or otherwise modified, or includes a reference to any matter to which the auditor drew attention by way of emphasis without qualifying the report; and if the auditor's report is qualified or otherwise modified, set out the full auditor's report and any further material necessary for the understanding of the qualification or other modification. Sections 4(2)-(4) further set out different situations of modified auditor's report.

Modified Opinion on the Summary Financial Statements (Paragraph 19)

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.

Hong Kong Specific Guidance (Footnote 6c): For reporting under footnote 2a, refer to paragraphs 11, 13 and 16 in Appendix 2.

Restriction on Distribution or Use or Alerting Readers to the Basis of Accounting (Paragraph 20)

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.

Comparatives (Paragraphs 21-22)

Paragraph 21 - Omission of Comparatives:

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.

Paragraph 22 - Comparatives Reported on by Another Auditor:

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 HKSA 710 requires the auditor to include in the auditor's report on the audited financial statements.

Ref: Para. A16 - Presumption Regarding Comparatives:

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. HKSA 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.

Ref: Para. A17 - Reasonableness of Omission:

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.

Unaudited Supplementary Information Presented with Summary Financial Statements (Paragraph 23)

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. A18: HKSA 700 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 23.

Other Information in Documents Containing Summary Financial Statements (Paragraph 24)

The auditor shall read the other information included in a document containing the summary financial statements and related auditor's report to consider whether there is a material inconsistency between the other information and the summary financial statements. If, on reading the other information, the auditor identifies a material inconsistency, the auditor shall determine whether the summary financial statements or the other information needs to be revised. If, on reading the other information, the auditor becomes aware of an apparent material misstatement of fact, the auditor shall discuss the matter with management.

Ref: Para. A19: HKSA 720 (Revised) contains requirements and guidance regarding the auditor's responsibilities relating to reading other information in a financial statement audit engagement, and responding to material inconsistencies and material misstatements of fact. Adapted as necessary in the circumstances, they may be helpful in applying the requirement in paragraph 24.

Auditor Association (Paragraphs 25-26)

Paragraph 25 - Entity Plans to State Auditor Has Reported but Not Include Report:

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.

Paragraph 26 - Auditor Not Engaged to Report on Summary Financial Statements:

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:

• (a) The reference to the auditor is made in the context of the auditor's report on the audited financial statements; and
• (b) 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. A20 - Other Appropriate Actions:

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.

Conformity and Compliance with International Standards on Auditing (Paragraphs 27-28)

Paragraph 27: As of October 2009 (date of issue), this HKSA conforms with International Standard on Auditing (ISA) 810 "Engagements to Report on Summary Financial Statements". Compliance with the requirements of this HKSA ensures compliance with ISA 810.

Paragraph 28: Additional local explanations and guidance are provided in footnotes 2a, 2b, 2c, 2d, 2e, 6a, 6b, 6c and the Appendices 1, 2 and 3.

HONG KONG SPECIFIC GUIDANCE (APPENDIX 2)

Hong Kong Companies Ordinance Context

Under section 439 of the Companies Ordinance (Cap. 622), the directors of a company may prepare for a financial year a financial report, in summary form, derived from the reporting documents for the financial year. Under section 441, the summary financial report may be sent to members instead of the reporting documents under section 430.

Definitions for Hong Kong Context (Paragraph 10 of Appendix 2)

Term	Definition
------	------------
Annual financial statements	A complete set of financial statements for a financial year, the components of which are: (i) statement of financial position; (ii) income statement / statement of profit or loss / statement of profit or loss and other comprehensive income; (iii) statement of changes in equity; (iv) statement of cash flows; and (v) a summary of significant accounting policies and other explanatory information
Other information	Financial and non-financial information, in addition to that legally required to be included in the summary financial report under Part 2 of the Companies (Summary Financial Reports) Regulation, which is issued by the directors to accompany the summary financial report

Form of Opinion in Hong Kong (Paragraph 11 of Appendix 2)

Section 4(5) of the Companies (Summary Financial Reports) Regulation requires that the auditor forms an opinion as to whether:

• The summary financial report is consistent with the reporting documents from which it is derived; and
• It complies with the requirements of Part 2 (i.e., sections 3 to 6) of the Companies (Summary Financial Reports) Regulation.

Consistency Considerations (Paragraphs 12-13 of Appendix 2)

The auditor states whether in his/her opinion the summary financial report is consistent with the annual financial statements, directors' report and auditor's report. The auditor is not required to form an opinion on whether the summary financial report gives a true and fair view.

Matters which may give rise to an inconsistency include:

• (a) Information which has been inaccurately extracted from the annual financial statements, directors' report and auditor's report; and
• (b) Information which, in the auditor's opinion, has been summarised in a manner which is not consistent with the annual financial statements, directors' report and auditor's report.

Compliance with Part 2 of the Companies (Summary Financial Reports) Regulation (Paragraphs 14-16 of Appendix 2)

The auditor gives consideration to the specific and detailed requirements of Part 2 of the Companies (Summary Financial Reports) Regulation and includes within the scope of his/her examination all matters required to be included in the summary financial report by Part 2.

Under section 4(1) of the Companies (Summary Financial Reports) Regulation, the summary financial report must contain a statement from the auditor as to whether the auditor's report for that financial year is qualified or otherwise modified, or includes a reference to any matter to which the auditor drew attention by way of emphasis without qualifying the report; and if the auditor's report is qualified or otherwise modified, set out in the summary financial report the full auditor's report and any further material necessary for the understanding of the qualification or other modification.

An inconsistency between the summary financial report and the annual financial statements, directors' report and auditor's report also means that the summary financial report is not properly derived from them and does not comply with the Companies (Summary Financial Reports) Regulation, therefore leading to a qualification of the auditor's report on the summary financial report on the grounds of non-compliance with the requirements of Part 2 as well as on the grounds of the inconsistency.

KEY PROVISIONS OF COMPANIES ORDINANCE AND REGULATIONS (APPENDIX 3)

Companies Ordinance Section 439 - Directors may prepare financial report in summary form

• (1) The directors of a company may prepare for a financial year a financial report, in summary form, derived from the reporting documents for the financial year
• (2) A financial report prepared under subsection (1) must contain the information prescribed by the Regulation and must comply with other requirements prescribed by the Regulation
• (3) Contravention of subsection (2) - director commits an offence and is liable to a fine of $300,000 (and imprisonment for 12 months for wilful failure)
• (4) Defence: reasonable grounds to believe a competent and reliable person was charged with ensuring compliance

Companies Ordinance Section 440 - Summary financial report to be approved and signed

• (1) A summary financial report must be approved by the directors and signed on the directors' behalf by a director
• (2) Every copy must state the name of the director who signed the report
• (3)-(4) Contravention - company and every responsible person commit an offence, liable to a fine at level 4

Companies Ordinance Section 441 - Company may send copy of summary financial report to member

• (1) If a company is required to send a copy of the reporting documents to a member under section 430, the company may send a copy of the summary financial report instead
• (2) The copy must be sent during the period within which a copy of the reporting documents would be required to be sent under section 430

Companies (Summary Financial Reports) Regulation - Part 2

Section 3 - Form and contents: general

• (1) Must contain information derived from the reporting documents
• (2)-(3) Must contain all information and particulars included in: statement of financial position, statement of comprehensive income (and consolidated versions if holding company), separate income statement if applicable, directors' report information as required under sections 388 and 390 of the Ordinance and the Companies (Directors' Report) Regulation, and notes to the financial statements as prescribed by the Disclosure Regulation

Section 4 - Form and contents: auditor's report and opinion

• (1) Must contain a statement from the auditor as to whether the auditor's report is qualified or otherwise modified, or includes a reference to any matter to which the auditor drew attention by way of emphasis without qualifying the report; and if qualified or otherwise modified, set out the full auditor's report and any further material necessary
• (2) If auditor's report states financial statements have not been properly prepared in compliance with the Ordinance, the summary financial report must contain that statement
• (3) If auditor's report states information in directors' report is not consistent with financial statements, the summary financial report must contain that statement
• (4) If auditor's report contains statements about inadequate accounting records, disagreement with accounting records, failure to obtain information, or particulars not contained in financial statements, the summary financial report must contain those statements
• (5) Must contain an opinion from the auditor as to whether the report is consistent with the reporting documents and complies with the requirements of Part 2

Section 5 - Form and contents: other matters

• (3) If company is not required to prepare consolidated financial statements, must contain a statement that the report only gives a summary and that a member may obtain free of charge a copy of the reporting documents if a request is made on or before the specified date
• (4) If company is required to prepare consolidated financial statements, similar statement referring to subsidiary undertakings
• (5) Must contain a statement about how a member may obtain free of charge a copy of the reporting documents
• (6) Does not prohibit including any other information or particulars which are not inconsistent with the reporting documents
• (7) Definition of "specified date"

Section 6 - Other requirements in relation to form

Subject to this Regulation, a company may specify any other requirements in relation to the form of its summary financial report that the company considers appropriate.

KEY TAKEAWAYS SUMMARY

Area	Key Requirement
------	----------------
Engagement Acceptance	Must have audited the underlying financial statements; criteria must be acceptable; management must agree to responsibilities
Procedures	Evaluate disclosure of summarized nature, availability of audited financial statements, applied criteria; compare with audited financial statements; evaluate preparation in accordance with criteria; evaluate whether misleading
Opinion Wording	"Consistent, in all material respects" or "fair summary" for unmodified opinion
Modified Opinion in Audited FS	Must describe the modification and its effect; if adverse/disclaimer, state it is inappropriate to express opinion on summary FS
Adverse Opinion on Summary FS	Required if summary FS are not consistent/fair summary and management refuses to make changes
Timing	Report may be dated later than audit report; must state no reflection of subsequent events if later dated
Comparatives	Presumption they should be included; if omitted, determine reasonableness
Unaudited Supplementary Information	Must be clearly differentiated; if not, request change or explain in report
Other Information	Read for material inconsistencies; discuss apparent material misstatements with management
Auditor Association	Prevent inappropriate association; request inclusion of report or change of statement
Hong Kong Specific	Comply with Companies Ordinance sections 439-441 and Companies (Summary Financial Reports) Regulation Part 2

50 MULTIPLE CHOICE QUESTIONS

Q1. According to HKSA 810, what is the prerequisite for an auditor to accept an engagement to report on summary financial statements?

A. The auditor must have been engaged to audit the entity's internal controls

B. The auditor must have been engaged to conduct an audit in accordance with HKSAs of the financial statements from which the summary financial statements are derived

C. The auditor must have a minimum of 5 years of audit experience

D. The auditor must have prior experience with summary financial statements

Answer: B

Q2. Which of the following is NOT one of the auditor's objectives under HKSA 810?

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

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

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

D. To prepare the summary financial statements on behalf of management

Answer: D

Q3. What are "summary financial statements" as defined in HKSA 810?

A. Financial statements that contain more detail than the audited financial statements

B. Historical financial information that is derived from financial statements but contains less detail, while still providing a structured representation consistent with that provided by the financial statements

C. Financial statements prepared using a special purpose framework only

D. Financial statements that include only the statement of financial position

Answer: B

Q4. Before accepting an engagement to report on summary financial statements, the auditor must obtain management's agreement regarding which of the following responsibilities?

A. Preparation of the summary financial statements in accordance with the applied criteria

B. Making the audited financial statements available to intended users without undue difficulty

C. Including the auditor's report on the summary financial statements in any document that contains the summary financial statements and indicates the auditor has reported on them

D. All of the above

Answer: D

Q5. If the auditor concludes that the applied criteria are unacceptable, what action should the auditor take?

A. Accept the engagement but include a qualified opinion

B. Not accept the engagement unless required by law or regulation to do so

C. Accept the engagement and issue a disclaimer of opinion

D. Accept the engagement but modify the criteria

Answer: B

Q6. When an engagement conducted under law or regulation does not comply with HKSA 810, what must the auditor's report on the summary financial statements indicate?

A. That the engagement was conducted in accordance with HKSA 810

B. That the engagement was not conducted in accordance with this HKSA

C. That the engagement was conducted in accordance with international standards

D. Nothing about the standard used

Answer: B

Q7. Which of the following procedures is NOT required by paragraph 8 of HKSA 810?

A. Evaluate whether the summary financial statements adequately disclose their summarized nature

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

C. Obtain written representations from management regarding the summary financial statements

D. Compare the summary financial statements with the related information in the audited financial statements

Answer: C

Q8. When summary financial statements are not accompanied by the audited financial statements, the auditor must evaluate whether they clearly describe:

A. The names of all shareholders

B. From whom or where the audited financial statements are available, or the relevant law or regulation

C. The audit fee charged

D. The names of all directors

Answer: B

Q9. What are the two acceptable phrases for an unmodified opinion on summary financial statements?

A. "Present fairly, in all material respects" or "give a true and fair view"

B. "Consistent, in all material respects" or "a fair summary"

C. "Are accurate" or "are complete"

D. "Are reliable" or "are correct"

Answer: B

Q10. If law or regulation prescribes wording for the opinion that differs from HKSA 810, what must the auditor do?

A. Refuse the engagement

B. Apply the procedures in paragraph 8 and any further procedures necessary, and evaluate whether users might misunderstand the opinion

C. Ignore the legal requirement and use HKSA 810 wording

D. Issue a disclaimer of opinion

Answer: B

Q11. When the auditor's report on the summary financial statements is dated later than the date of the auditor's report on the audited financial statements, what must the report state?

A. That the summary financial statements have been updated for subsequent events

B. 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

C. That a new audit was performed

D. Nothing about subsequent events

Answer: B

Q12. If the auditor becomes aware of facts that existed at the date of the auditor's report on the audited financial statements but were previously unknown, what must the auditor do?

A. Immediately issue the report on the summary financial statements

B. Not issue the report on the summary financial statements until the consideration of such facts in relation to the audited financial statements in accordance with HKSA 560 has been completed

C. Ignore the facts as they relate to the audited financial statements

D. Issue a qualified opinion on the summary financial statements

Answer: B

Q13. Which of the following is NOT a required element of the auditor's report on summary financial statements?

A. A title clearly indicating it as the report of an independent auditor

B. An addressee

C. A description of the audit procedures performed on the underlying financial statements

D. The auditor's signature

Answer: C

Q14. The introductory paragraph of the auditor's report on summary financial statements must include a statement that:

A. The summary financial statements contain all disclosures required by the financial reporting framework

B. Reading the summary financial statements is not a substitute for reading the audited financial statements

C. The summary financial statements are more useful than the audited financial statements

D. The auditor has performed a full audit of the summary financial statements

Answer: B

Q15. The auditor shall date the auditor's report on the summary financial statements no earlier than:

A. The date of the auditor's report on the audited financial statements only

B. The date on which the auditor has obtained sufficient appropriate evidence and the date of the auditor's report on the audited financial statements

C. The date the summary financial statements are distributed to members

D. The end of the financial year

Answer: B

Q16. When the auditor's report on the audited financial statements contains a qualified opinion, what must the auditor's report on the summary financial statements include?

A. Only the unmodified opinion on the summary financial statements

B. A statement that the auditor's report on the audited financial statements contains a qualified opinion and a description of the basis for the qualified opinion and its effect on the summary financial statements

C. A disclaimer of opinion on the summary financial statements

D. A statement that the summary financial statements are not reliable

Answer: B

Q17. When the auditor's report on the audited financial statements contains an adverse opinion, what must the auditor's report on the summary financial statements state?

A. An unmodified opinion on the summary financial statements

B. A qualified opinion on the summary financial statements

C. That as a result of the adverse opinion, it is inappropriate to express an opinion on the summary financial statements

D. An adverse opinion on the summary financial statements

Answer: C

Q18. If the summary financial statements are not consistent with the audited financial statements and management refuses to make changes, what opinion should the auditor express?

A. A qualified opinion

B. An adverse opinion

C. A disclaimer of opinion

D. An unmodified opinion with an emphasis of matter paragraph

Answer: B

Q19. When distribution or use of the auditor's report on the audited financial statements is restricted, what must the auditor do in the report on the summary financial statements?

A. Ignore the restriction

B. Include a similar restriction in the auditor's report on the summary financial statements

C. Issue a separate unrestricted report

D. Remove the restriction

Answer: B

Q20. If the audited financial statements contain comparatives but the summary financial statements do not, what must the auditor do?

A. Automatically issue a qualified opinion

B. Determine whether the omission is reasonable in the circumstances

C. Add the comparatives to the summary financial statements

D. Issue a disclaimer of opinion

Answer: B

Q21. If the summary financial statements contain comparatives that were reported on by another auditor, what must the auditor's report include?

A. No reference to the other auditor

B. The matters that HKSA 710 requires the auditor to include in the auditor's report on the audited financial statements

C. A statement that the other auditor's work is not reliable

D. A qualified opinion

Answer: B

Q22. If unaudited supplementary information presented with the summary financial statements is not clearly differentiated, what should the auditor do?

A. Ignore the issue

B. Ask management to change the presentation; if refused, explain in the auditor's report that such information is not covered by the report

C. Include the information in the audit scope

D. Issue a qualified opinion

Answer: B

Q23. When reading other information in a document containing summary financial statements, if the auditor identifies a material inconsistency, what should the auditor do?

A. Immediately issue a qualified opinion

B. Determine whether the summary financial statements or the other information needs to be revised

C. Ignore the inconsistency

D. Withdraw from the engagement

Answer: B

Q24. If the auditor becomes aware that the entity plans to state that the auditor has reported on summary financial statements but does not plan to include the related auditor's report, what should the auditor do?

A. Allow the entity to proceed

B. Request management to include the auditor's report; if not done, take other appropriate actions to prevent inappropriate association

C. Issue a new report

D. Resign from the audit engagement

Answer: B

Q25. If an auditor is not engaged to report on summary financial statements but becomes aware that the entity plans to refer to the auditor in connection with summary financial statements, what must the auditor be satisfied about?

A. The reference is made in the context of the auditor's report on the audited financial statements and does not give the impression the auditor has reported on the summary financial statements

B. The entity has obtained legal advice

C. The reference is approved by the board

D. The reference includes the auditor's fee

Answer: A

Q26. According to HKSA 810, what is the effective date for engagements?

A. For periods beginning on or after 15 December 2009

B. For periods ending on or after 15 December 2009

C. For engagements accepted after 15 December 2009

D. For all engagements regardless of date

Answer: A

Q27. Under the Hong Kong Companies Ordinance, which section permits directors to prepare a summary financial report?

A. Section 430

B. Section 439

C. Section 441

D. Section 610

Answer: B

Q28. Under section 441 of the Hong Kong Companies Ordinance, when must a summary financial report be sent to a member?

A. Within 3 months of the financial year end

B. During the period within which a copy of the reporting documents would be required to be sent under section 430

C. Within 6 months of the financial year end

D. At any time during the year

Answer: B

Q29. According to the Companies (Summary Financial Reports) Regulation, what must a summary financial report contain regarding the auditor's report?

A. Only a summary of the auditor's opinion

B. A statement as to whether the auditor's report is qualified or otherwise modified, and if so, the full auditor's report and any further material necessary

C. Only the date of the auditor's report

D. Only the auditor's signature

Answer: B

Q30. Under section 4(5) of the Companies (Summary Financial Reports) Regulation, what must the auditor's opinion address?

A. Whether the summary financial report gives a true and fair view

B. Whether the summary financial report is consistent with the reporting documents and complies with Part 2 of the Regulation

C. Whether the entity is a going concern

D. Whether the directors have acted properly

Answer: B

Q31. According to Appendix 2 of HKSA 810, what is the auditor NOT required to form an opinion on regarding the summary financial report?

A. Whether it is consistent with the annual financial statements

B. Whether it gives a true and fair view

C. Whether it complies with Part 2 of the Companies (Summary Financial Reports) Regulation

D. Whether it is consistent with the directors' report

Answer: B

Q32. Which of the following is a matter that may give rise to an inconsistency between the summary financial report and the annual financial statements?

A. Information inaccurately extracted from the annual financial statements

B. Information summarised in a manner not consistent with the annual financial statements

C. Both A and B

D. None of the above

Answer: C

Q33. Under the Companies Ordinance section 439, what is the penalty for a director who wilfully fails to take all reasonable steps to ensure the summary financial report complies with requirements?

A. A fine of $150,000

B. A fine of $300,000 and imprisonment for 12 months

C. A fine of $500,000

D. Imprisonment for 6 months only

Answer: B

Q34. According to section 440 of the Companies Ordinance, who must sign the summary financial report?

A. The company secretary

B. The auditor

C. A director on behalf of the directors

D. The chief financial officer

Answer: C

Q35. Under section 3 of the Companies (Summary Financial Reports) Regulation, what must a summary financial report contain?

A. Only the statement of financial position

B. All information and particulars included in the statement of financial position, statement of comprehensive income, and other specified statements

C. Only the directors' report

D. Only the auditor's report

Answer: B

Q36. If a company is a holding company, what additional information must the summary financial report contain?

A. Only the parent company's financial statements

B. Consolidated statement of financial position and consolidated statement of comprehensive income

C. Only the subsidiaries' financial statements

D. No additional information is required

Answer: B

Q37. According to section 5(3) of the Companies (Summary Financial Reports) Regulation, what must a summary financial report state in a prominent position?

A. The names of all directors

B. That the report only gives a summary and that a member may obtain free of charge a copy of the reporting documents

C. The audit fee

D. The company's profit for the year

Answer: B

Q38. What is the "specified date" for requesting reporting documents under section 5(7) of the Companies (Summary Financial Reports) Regulation?

A. 30 days after the annual general meeting

B. The day immediately before the expiry of a period of 6 months after the date of the annual general meeting

C. 12 months after the financial year end

D. The date of the auditor's report

Answer: B

Q39. According to HKSA 810, what is the auditor's responsibility regarding the applied criteria?

A. To develop the criteria

B. To determine whether the applied criteria are acceptable

C. To apply the criteria in preparing the summary financial statements

D. To modify the criteria as needed

Answer: B

Q40. When criteria for summary financial statements are established by an authorized standards setting organization or by law or regulation, what presumption may the auditor make?

A. That the criteria are unacceptable

B. That the criteria are acceptable

C. That the criteria need to be modified

D. That the criteria are incomplete

Answer: B

Q41. According to paragraph A4 of HKSA 810, which factor affects the auditor's determination of the acceptability of applied criteria?

A. The audit fee

B. The nature of the entity

C. The auditor's experience

D. The size of the audit firm

Answer: B

Q42. What should the auditor do if management's agreement regarding responsibilities for summary financial statements cannot be obtained?

A. Accept the engagement with a qualified opinion

B. Not accept the engagement unless required by law or regulation

C. Accept the engagement and document the disagreement

D. Accept the engagement but limit procedures

Answer: B

Q43. According to HKSA 810, when may the auditor's report on summary financial statements be dated?

A. Only on the same date as the auditor's report on the audited financial statements

B. Later than the date of the auditor's report on the audited financial statements

C. Only before the date of the auditor's report on the audited financial statements

D. At any time regardless of the audit report date

Answer: B

Q44. What is the purpose of the statement in the auditor's report that reading the summary financial statements is not a substitute for reading the audited financial statements?

A. To discourage users from reading the summary financial statements

B. To inform users that the summary financial statements do not contain all disclosures required by the financial reporting framework

C. To indicate the auditor's lack of confidence in the summary financial statements

D. To comply with legal requirements only

Answer: B

Q45. According to HKSA 810, what is the consequence if the auditor's report on the audited financial statements contains a disclaimer of opinion?

A. The auditor can still express an unmodified opinion on the summary financial statements

B. The auditor must state that it is inappropriate to express an opinion on the summary financial statements

C. The auditor must express a qualified opinion on the summary financial statements

D. The auditor must withdraw from the engagement

Answer: B

Q46. Under the Hong Kong Companies Ordinance, which companies are permitted to send a summary financial report to members?

A. All companies incorporated in Hong Kong

B. Companies incorporated in Hong Kong other than those falling within the reporting exemption under Division 2 of Part 9

C. Only listed companies

D. Only private companies

Answer: B

Q47. According to Appendix 2 of HKSA 810, what is included in the definition of "annual financial statements"?

A. Only the statement of financial position and income statement

B. Statement of financial position, income statement, statement of changes in equity, statement of cash flows, and a summary of significant accounting policies and other explanatory information

C. Only the statement of comprehensive income

D. Only the statement of financial position and notes

Answer: B

Q48. Under section 4(2) of the Companies (Summary Financial Reports) Regulation, if the auditor's report states that a true and fair view has not been given, what must the summary financial report contain?

A. Only the auditor's opinion

B. That statement from the auditor's report

C. A statement from management explaining the situation

D. Nothing additional

Answer: B

Q49. According to HKSA 810, what should the auditor do if unaudited supplementary information is not clearly differentiated from the summary financial statements and management refuses to change the presentation?

A. Issue a qualified opinion

B. Explain in the auditor's report that such information is not covered by the report

C. Include the information in the scope of the audit

D. Withdraw from the engagement

Answer: B

Q50. What is the relationship between HKSA 810 and ISA 810?

A. HKSA 810 is completely different from ISA 810

B. HKSA 810 conforms with ISA 810 as of October 2009

C. HKSA 810 replaces ISA 810

D. HKSA 810 is not related to ISA 810

Answer: B