Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations

Section 5815

Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations

Section 5815

Section 5815
  • Examples of agreements requiring the auditor to report on compliance under this Section include loan agreements which usually impose covenants such as payments of interest, maintenance of current ratio, restriction of dividend payments and use of the proceeds of sales of property
  • Engagements should be accepted only when the provisions of the agreement, statute or regulation to be reported on deal with matters within the auditor’s professional competence
  • When engaged to express an opinion as to the client’s compliance with criteria established by provisions of an agreement, statute or regulation:
    • The examination should be performed and the report prepared by persons having adequate technical training and proficiency in auditing, with due care and with an objective state of mind
    • The auditor should plan and perform the audit to reduce audit risk to an acceptably low level and the auditor should plan the nature, timing and extent of direction and supervision of engagement team members and review of their work
    • The auditor should obtain an understanding of the entity and its environment, including internal control, sufficient to identify and assess the risks of material non-compliance and sufficient to design and perform further audit procedures; and
    • The auditor should obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the audit opinion

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