How can an audit of a single financial statement be performed?

An audit of a single financial statement can indeed be performed both as a separate engagement and as part of the audit of a complete set of financial statements.

When conducting an audit of a single financial statement, the auditor focuses specifically on the particular statement, such as the income statement or balance sheet. This allows for a detailed examination of that statement’s compliance with relevant accounting standards, as well as its accuracy and completeness.

Performing this type of audit as a separate engagement may be desirable in situations where stakeholders need assurance on just one aspect of a company's financial health without requiring the full set of financial statements. For example, a lender may only need assurance regarding the balance sheet when evaluating a loan application.

Additionally, integrating the audit of a single financial statement within a broader engagement of a full set of financial statements provides a comprehensive view of the financial position and performance of the organization while still allowing for an in-depth examination of individual components, if necessary.

These two methods of conducting the audit highlight the flexibility and adaptability of audit practices to meet the specific needs of stakeholders.