Mr. BK has been engaged by XYZ Ltd. to report on summary financial statements derived from the financial statements audited by him in accordance…

In the given situation, Mr. BK has been engaged by XYZ Ltd. to report on summary financial statements derived from the financial statements audited by him in accordance with SAs. Mr. BK, wants to determine whether the applied criteria are acceptable before accepting such assignment. As per SA 810, “Engagements to Report on Summary Financial Statements", before accepting an engagement to report on summary of financial statements, the auditor shall determine whether applied criteria are acceptable. 'Applied criteria' refers to the criteria applied by management in the preparation of the summary financial statements. Factors affecting the auditor's determination of the acceptability of the applied criteria are: The nature of the entity;The purpose of the summary financial statements;The information needs of the intended users of the summary financial statements; andWhether the applied criteria will result in summary financial statements that are not misleading in the circumstances.