REPORTS FOR AUDITS OF SINGLE FINANCIAL STATEMENTS AND SPECIFIC ELEMENTS, ACCOUNTS OR ITEMS OF A FINANCIAL STATEMENT

Introduction

1. These Illustrative Reports deal with reports on audits of single
financial statements and specific elements, accounts or items of a
financial statement. The CASs in the 100-700 series and CAS 800,
Special Considerations — Audits of Financial Statements Prepared in
Accordance with Special Purpose Frameworks, if applicable, apply to
an audit of financial statements and are to be adapted as necessary
in the circumstances when applied to audits of other historical
financial information, such as single financial statements and specific
elements, accounts or items of a financial statement. CAS 805, Special
Considerations — Audits of Single Financial Statements and Specific
Elements, Accounts or Items of a Financial Statement, deals with the
special considerations in the application of those CASs to an audit of a
single financial statement or of a specific element, account or item of
a financial statement. (Refer to Q&A 3(a) in this Guide, which provides
guidance with respect to reporting in accordance with CAS 805.)
2. In the Illustrative Reports, it has been assumed that the single financial
statement or specific element, account or item of a financial statement
discloses, for example, the applicable financial reporting framework,
accounting policy choices, and significant interpretations of any contract,
legislation or regulation, made by management in preparing the single
financial statements and specific elements, accounts or items of a
financial statement.
3. It has been assumed in Illustrative Report 6(a) that management does
not have a choice of financial reporting frameworks in the preparation of
the financial information. It has been assumed in Illustrative Report 6(b)
that management does have a choice of financial reporting frameworks
in the preparation of the financial information. Accordingly, paragraph
13(b) of CAS 800 applies to Illustrative Report 6(b). (Refer to Q&A 2(g)
in this Guide, which provides guidance when management has a choice
of financial reporting frameworks in the preparation of special purpose
financial statements.)
4. It has been assumed in the Illustrative Reports that comparative
information is not required to be presented by the financial reporting
framework

6(a) Schedule of Operating Costs Prepared in Accordance with the Terms
of a Lease Agreement — Auditor’s Report

• The schedule of operating costs of DEF Property is for the year
ended December 31, 2010 and is prepared to assist in meeting the
requirements of the lease agreement of DEF Property.
• The tenants of DEF Property are provided with the schedule of
operating costs as required by Section Z of ABC Company’s lease
agreement for DEF Property. The tenants are an intended user of
the schedule.
• The financial reporting framework is prescribed by Section X of
ABC Company’s lease agreement for DEF Property. Management
does not have a choice of financial reporting frameworks in the
preparation of the schedule.
• The notes to the schedule describe the financial reporting
framework by reference to the financial reporting provisions of
Section C of ABC Company’s lease agreement for DEF Property.
• The auditor’s report refers to the current period only as
comparative information is not presented.
• The audit is conducted in accordance with Canadian Auditing
Standards.
• An Emphasis of Matter paragraph is required. Use of the auditor’s
report is restricted but distribution of the auditor’s report is not
restricted. Other choices are permitted. (Refer to Q&A 2(b) in this
Guide for the permitted choices.)
(Please read Introduction to Illustrative Reports)
1. The schedule of operating costs does not constitute a complete set
of financial statements as defined in paragraph 13(f) of CAS 200,
Overall Objectives of the Independent Auditor and the Conduct of
an Audit in Accordance with Canadian Auditing Standards, because
the schedule is not a structured representation of historical financial
information, including related notes, intended to communicate
the entity’s economic resources or obligations at a point in time
or the changes therein for a period of time in accordance with a
financial reporting framework. The schedule consists of a number
of items of a financial statement and, therefore, CAS 805, Special
Considerations — Audits of Single Financial Statements and Specific
Elements, Accounts or Items of a Financial Statement, applies.
Further, the financial reporting framework used in preparing
the schedule is designed to meet the needs of specific users as
discussed in paragraph 6 of CAS 800, Special Considerations —
Audits of Financial Statements Prepared in Accordance with Special
Purpose Frameworks. Accordingly, when reporting on the schedule
of operating costs, the auditor also makes reference to the CASs in
the 100-700 series and the special considerations in CAS 800.
2. One of the considerations in forming an opinion on a schedule of
specific elements, accounts or items of a financial statement is
whether the schedule of specific elements, accounts or items of a
financial statement adequately refers to or describes the applicable
financial reporting framework. In this case, it has been assumed
that the financial reporting framework is described in the notes to
the schedule of specific elements, accounts or items of a financial
statement by reference to Section X of ABC Company’s lease
agreement for DEF Property, and that this provision in the lease
agreement is sufficiently detailed, and not subject to significant
interpretation, to be an adequate description of the financial
reporting framework.
3. Paragraph 6(a) of CAS 210, Agreeing the Terms of Audit
Engagements, requires the auditor to determine the acceptability
of the financial reporting framework applied in the preparation of
the financial statement or the specific element account or item
of a financial statement. Paragraph 8 of CAS 805 indicates that
such determination includes whether application of the financial
reporting framework will result in a presentation that provides
adequate disclosures to enable the intended users to understand
the information conveyed in the schedule, and the effect of material
transactions and events on the information conveyed in the
schedule.
4. Paragraph A8 of CAS 800 provides guidance on determining the
acceptability of a financial reporting framework that encompasses
the financial reporting provisions of a contract. The financial
reporting framework is acceptable if it exhibits the attributes
normally exhibited by acceptable financial reporting frameworks as
described in Appendix 2 to CAS 210.
5. It has been assumed that this is a compliance framework. (Refer
to Q&A 2(d) in this Guide for guidance with respect to fair
presentation and compliance frameworks.)
INDEPENDENT AUDITOR’S REPORT
To the Directors of ABC Company
We have audited the accompanying schedule of operating costs for
DEF Property for the year ended December 31, 2010 and a summary
of significant accounting policies and other explanatory information
(together “the schedule”). The schedule has been prepared by
management based on the financial reporting provisions in Section X of
ABC Company’s lease agreement for DEF Property.
Management’s Responsibility for the Schedule
Management of ABC Company is responsible for the preparation of
the schedule in accordance with the financial reporting provisions
in Section X of ABC Company’s lease agreement for DEF Property,
and for such internal control as management determines is necessary
to enable the preparation of the schedule that is free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the schedule based
on our audit. We conducted our audit in accordance with Canadian
generally accepted auditing standards. Those standards require that
we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the schedule is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the schedule. The procedures
selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the schedule, whether due to
fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation of the schedule
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 the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well
as evaluating the overall presentation of the schedule.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the schedule of operating costs for DEF Property for the
year ended December 31, 2010 is prepared, in all material respects, in
accordance with the financial reporting provisions in Section X of ABC
Company’s lease agreement for DEF Property.
Basis of Accounting and Restriction on Use
Without modifying our opinion, we draw attention to Note Y to the
schedule, which describes the basis of accounting. The schedule is
prepared to assist ABC Company to meet the requirements of Section
Z of ABC Company’s lease agreement for DEF Property. As a result,
the schedule may not be suitable for another purpose. Our report is
intended solely for ABC Company and the tenants of DEF Property
and should not be used by parties other than ABC Company and the
tenants of DEF Property.
[Auditor’s signature]
[Date of the auditor’s report]
[Auditor’s address]

6(b) Schedule of Gross Sales Prepared in Accordance with the Terms of a
Lease Agreement — Auditor’s Report

• The schedule of gross sales of tenant DEF Company at Store GHI
is for the year ended December 31, 2010 and is prepared to assist
in meeting the requirements of the lease agreement between ABC
Company and DEF Company for the store.
• The landlord, ABC Company, is provided with the schedule of gross
sales as required by Section Z of the lease agreement. The landlord
is an intended user of the schedule.
• The financial reporting framework is prescribed by Section X of
the lease agreement. The financial reporting framework requires
that the schedule of gross sales be prepared in accordance with
“Canadian GAAP”. Because Canadian GAAP includes different
financial reporting frameworks, management has a choice of
financial reporting frameworks in the preparation of the schedule.
• The notes to the schedule describe the financial reporting
framework by reference to the financial reporting provisions of
the lease agreement, management’s choice of financial reporting
framework and any interpretations of the provisions of the lease
agreement.
• The auditor’s report refers to the current period only.
• The audit is conducted in accordance with Canadian Auditing
Standards.
• An Emphasis of Matter paragraph is required. Use of the auditor’s
report is restricted but distribution of the auditor’s report is not
restricted. Other choices are permitted. (Refer to Q&A 2(b) in this
Guide for the permitted choices.)
(Please read Introduction to Illustrative Reports)
1. The schedule of gross sales does not constitute a complete set
of financial statements as defined in paragraph 13(f) of CAS 200,
Overall Objectives of the Independent Auditor and the Conduct of
an Audit in Accordance with Canadian Auditing Standards, because
the schedule is not a structured representation of historical financial
information, including related notes, intended to communicate
the entity’s economic resources or obligations at a point in time
or the changes therein for a period of time in accordance with a
financial reporting framework. The schedule consists of a number
of items of a financial statement and, therefore, CAS 805, Special
Considerations — Audits of Single Financial Statements and Specific
Elements, Accounts or Items of a Financial Statement, applies.
Further, the financial reporting framework used in preparing
the schedule is designed to meet the needs of specific users, as
discussed in paragraph 6 of CAS 800, Special Considerations —
Audits of Financial Statements Prepared in Accordance with Special
Purpose Frameworks. Accordingly, when reporting on the schedule
of gross sales, the auditor also makes reference to the CASs in the
100-700 series and the special considerations in CAS 800.
2. One of the considerations in forming an opinion on a schedule
of specific elements, accounts or items of a financial statement
is whether the schedule of specific elements, accounts or items
of a financial statement adequately refers to or describes the
applicable financial reporting framework. In this case, it has been
assumed that a note to the schedule of gross sales describes the
financial reporting framework by reference to Section X of the lease
agreement and that such note also indicates which Part of the CPA
Canada Handbook – Accounting has been chosen by management.
Therefore, in the auditor’s report, the reference to the applicable
financial reporting framework could be made by either a reference
to Section X of the lease agreement or by a reference to the note to
the schedule of gross sales. The latter option has been selected in
this Illustrative Report.
3. Paragraph 6(a) of CAS 210, Agreeing the Terms of Audit
Engagements, requires the auditor to determine the acceptability
of the financial reporting framework applied in the preparation of
the financial statement or the specific element account or item
of a financial statement. Paragraph 8 of CAS 805 indicates that
such determination includes whether application of the financial
reporting framework will result in a presentation that provides
adequate disclosures to enable the intended users to understand
the information conveyed in the schedule, and the effect of material
transactions and events on the information conveyed in the
schedule.
4. Paragraph A8 of CAS 800 provides guidance on determining the
acceptability of a financial reporting framework that encompasses
the financial reporting provisions of a contract. The financial
reporting framework is acceptable if it exhibits the attributes
normally exhibited by acceptable financial reporting frameworks as
described in Appendix 2 to CAS 210.
5. Because management has a choice of financial reporting
frameworks, paragraph 13(b) of CAS 800 requires the auditor’s
report to make reference to management’s responsibility for
determining that the applicable financial reporting framework
is acceptable in the circumstances. (Refer to Q&A 2(g) in this
Guide for guidance when management has a choice of financial
reporting frameworks in the preparation of special purpose financial
statements.)
6. It has been assumed that this is a compliance framework. (Refer
to Q&A 2(d) in this Guide for guidance with respect to fair
presentation and compliance frameworks.)
INDEPENDENT AUDITOR’S REPORT
To the Directors of DEF Company
We have audited the accompanying schedule of gross sales at store
GHI for the year ended December 31, 2010 and a summary of significant
accounting policies and other explanatory information (together “the
schedule”). The schedule has been prepared by management of DEF
Company using the basis of accounting described in Note Y.
Management’s Responsibility for the Schedule
Management of DEF Company is responsible for the preparation of
the schedule in accordance with the basis of accounting described in
Note Y; this includes determining that the applicable financial reporting
framework is acceptable for the preparation of the schedule in the
circumstances, and for such internal control as management determines
is necessary to enable the preparation of the schedule that is free from
material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the schedule based
on our audit. We conducted our audit in accordance with Canadian
generally accepted auditing standards. Those standards require that
we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the schedule is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the schedule. The procedures
selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the schedule, whether due to
fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation of the schedule
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 the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well
as evaluating the overall presentation of the schedule.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the schedule of gross sales at store GHI for the year
ended December 31, 2010 is prepared, in all material respects, in
accordance with the basis of accounting described in Note Y.
Basis of Accounting and Restriction on Use
Without modifying our opinion, we draw attention to Note Y to the
schedule, which describes the basis of accounting. The schedule is
prepared to assist DEF Company to meet the requirements of Section
Z of the lease agreement. As a result, the schedule may not be suitable
for another purpose. Our report is intended solely for ABC Company
and DEF Company and should not be used by parties other than ABC
Company and DEF Company.
[Auditor’s signature]
[Date of the auditor’s report]
[Auditor’s address]

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