Special Considerations — Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks
CAS 800
Special Considerations — Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks
CAS 800
Definitions
- Special purpose F/S – F/S prepared in accordance with a special purpose framework
- Special purpose framework – A financial reporting framework designed to meet the financial information needs of specific users
- Examples of special purpose frameworks – A tax basis of accounting, cash basis of accounting, financial reporting provisions established by a regulator or a contract
Considerations When Accepting the Engagement
- Determine the acceptability of the financial reporting framework used to prepare the F/S
- Obtain an understanding of:
- The purpose for which the F/S are prepared
- The intended users; and
- The steps taken by management to determine that the applicable financial reporting framework is acceptable in the circumstances
Considerations When Planning and Performing the Audit
- Must comply with all CASs relevant to the audit
- determine whether application of the CASs requires special consideration in the circumstances of the engagement
- For example, in CAS 320 – Materiality, judgments about matters that are material to users of the F/S are based on a consideration of the common financial information needs of users as a group. In the case of an audit of special purpose F/S, those judgments are based on a consideration of the financial information needs of the intended users
- Obtain an understanding of the entity’s selection and application of accounting policies
- In the case of F/S prepared in accordance with the provisions of a contract, obtain an understanding of any significant interpretations of the contract that management made in the preparation of those F/S
Forming an Opinion and Reporting Considerations
- Evaluate whether the F/S adequately refer to or describe the applicable financial reporting framework
- If the F/S are prepared in accordance with the provisions of a contract, evaluate if the F/S adequately describe any significant interpretations of the contract on which the F/S are based
- The auditor’s report should describe the purpose for which the F/S are prepared and, if necessary, the intended users, or refer to a note in the special purpose F/S that contains that information
- If management has a choice of financial reporting frameworks in the preparation of the F/S, the management’s responsibility paragraph should make a reference to management’s responsibility for determining that the applicable financial reporting framework is acceptable
- Include an Emphasis of Matter paragraph alerting users that the F/S are prepared in accordance with a special purpose framework and that the F/S may not be suitable for another purpose
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Special Considerations — Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks
CAS 800
Special Considerations — Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks
CAS 800
Definitions
- Special purpose F/S – F/S prepared in accordance with a special purpose framework
- Special purpose framework – A financial reporting framework designed to meet the financial information needs of specific users
- Examples of special purpose frameworks – A tax basis of accounting, cash basis of accounting, financial reporting provisions established by a regulator or a contract
Considerations When Accepting the Engagement
- Determine the acceptability of the financial reporting framework used to prepare the F/S
- Obtain an understanding of:
- The purpose for which the F/S are prepared
- The intended users; and
- The steps taken by management to determine that the applicable financial reporting framework is acceptable in the circumstances
Considerations When Planning and Performing the Audit
- Must comply with all CASs relevant to the audit
- determine whether application of the CASs requires special consideration in the circumstances of the engagement
- For example, in CAS 320 – Materiality, judgments about matters that are material to users of the F/S are based on a consideration of the common financial information needs of users as a group. In the case of an audit of special purpose F/S, those judgments are based on a consideration of the financial information needs of the intended users
- Obtain an understanding of the entity’s selection and application of accounting policies
- In the case of F/S prepared in accordance with the provisions of a contract, obtain an understanding of any significant interpretations of the contract that management made in the preparation of those F/S
Forming an Opinion and Reporting Considerations
- Evaluate whether the F/S adequately refer to or describe the applicable financial reporting framework
- If the F/S are prepared in accordance with the provisions of a contract, evaluate if the F/S adequately describe any significant interpretations of the contract on which the F/S are based
- The auditor’s report should describe the purpose for which the F/S are prepared and, if necessary, the intended users, or refer to a note in the special purpose F/S that contains that information
- If management has a choice of financial reporting frameworks in the preparation of the F/S, the management’s responsibility paragraph should make a reference to management’s responsibility for determining that the applicable financial reporting framework is acceptable
- Include an Emphasis of Matter paragraph alerting users that the F/S are prepared in accordance with a special purpose framework and that the F/S may not be suitable for another purpose