Annual Audit Manual

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8041 Reporting on special purpose financial statements
Jul-2013

In This Section

Introduction and scope of CAS 800

Objective

Special considerations when auditing special purpose financial statements

Overview

This topic explains guidance in relation to an audit of special purpose financial statements in accordance with CAS 800, including:

  • Introduction and scope of CAS 800
  • Special considerations when auditing special purpose financial statements.
Introduction and scope of CAS 800

OAG Guidance

The Canadian Auditing Standards (CASs) in the 100-700 series apply to an audit of financial statements. CAS 800 Special considerations - Audits of financial statements prepared in accordance with special purpose frameworks was developed by the AASB to address engagements to report on financial statements prepared under a special purpose framework. CAS 800 is written in the context of a complete set of financial statements prepared in accordance with a special purpose framework. CAS 805 Special considerations-Audits of single financial statements and specific elements, accounts or items of a financial statement deals with special considerations relevant to an audit of a single financial statement or of a specific element, account or item of a financial statement.

Special purpose financial statements are those that are prepared in accordance with a special purpose framework, defined as a financial reporting framework designed to meet the financial information needs of specific users. This differs from general purpose financial statements that are designed to meet the needs of general users, in most cases the shareholders of the entity.

Examples of special purpose frameworks include:

  • A tax basis of accounting for a set of financial statements that accompany an entity's tax return;
  • The cash receipts and disbursements basis of accounting for cash flow information that an entity may be requested to prepare for creditors;
  • The financial reporting provisions established by a regulator to meet the requirements of that regulator; or
  • The financial reporting provisions of a contract, such as a bond indenture, a loan agreement, or a project grant.

CAS 800 does not apply to the report of a component auditor, issued as a result of work performed on the financial information of a component at the request of a group engagement team for purposes of an audit of group financial statements i.e. a group reporting package. Such engagements are addressed by CAS 600 Special considerations—Audits of group financial statements (including the work of component auditors). Refer to OAG Audit 2300.

This topic identifies aspects of the audit that require special consideration when performing an audit of special purpose financial statements.

Objective

CAS Objective

The objective of the auditor, when applying CASs in an audit of financial statements prepared in accordance with a special purpose framework, is to address appropriately the special considerations that are relevant to (CAS 800.5):

  1. The acceptance of the engagement;
  2. The planning and performance of that engagement; and
  3. Forming an opinion and reporting on the financial statements.
Special considerations when auditing special purpose financial statements

CAS Requirement

CAS 200 requires the auditor to comply with all CASs relevant to the audit. In planning and performing an audit of special purpose financial statements, the auditor shall determine whether application of the CASs requires special consideration in the circumstances of the engagement (CAS 800.9).

CAS Guidance

CAS 200 requires the auditor to comply with (a) relevant ethical requirements, including those pertaining to independence, relating to financial statement audit engagements, and (b) all CASs relevant to the audit. It also requires the auditor to comply with each requirement of an CAS unless, in the circumstances of the audit, the entire CAS is not relevant or the requirement is not relevant because it is conditional and the condition does not exist. In exceptional circumstances, the auditor may judge it necessary to depart from a relevant requirement in an CAS by performing alternative audit procedures to achieve the aim of that requirement (CAS 800.A9).

Application of some of the requirements of the CASs in an audit of special purpose financial statements may require special consideration by the auditor. For example, in CAS 320, judgments about matters that are material to users of the financial statements 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 financial statements, however, those judgments are based on a consideration of the financial information needs of the intended users (CAS 800.A10).

OAG Guidance

CAS 800 Audits of financial statements prepared in accordance with special purpose frameworks deals with the acceptability of the financial reporting framework, planning and reporting considerations relating to special purpose frameworks. Such considerations are incremental to the requirements and guidance set out in CASs 100-700 series which form the basis of the audit. See OAG Audit 1020 for guidance on conduct of an audit in accordance with CASs and how to respond to departures from CAS objectives and requirements. In particular, engagement teams need to consider:

  • Engagement acceptance—acceptability of the financial reporting framework
  • Engagement acceptance—assessing frameworks based on a contract, partial compliance with a recognized framework or an entity's own accounting policies
  • Applying materiality in the context of special purpose financial statements
  • Required communications with those charged with governance