Unified Guidance for Restricted-Use Reports

Does an engagement require a restricted-use report? If so, what elements should the CPA include in the report? New SAS no. 87, Restricting the Use of an Auditor's Report, helps answer these questions. Although previous auditing standards for engagements requiring restricted-use reports contain guidance applicable to specific types of engagements, this statement unifies the guidance for restricted-use reports. The ASB added to the statement a list of illustrative auditors' reports in SASs and AICPA audit and accounting guides that will require conforming changes as a result of the new standard's guidance.

Restricted-use reports are intended only for specified parties. SAS no. 87 allows auditors to restrict the use of any report, even one that ordinarily is a general use report. It says auditors should restrict the use of a report when

  • The subject matter of the auditor's report or the presentation being reported on is based either on measurement or disclosure criteria contained in contractual agreements or on regulatory provisions that do not conform with GAAP or another comprehensive basis of accounting.

  • The accountant's report is based on procedures that are especially designed and performed to satisfy the needs of specified parties who accept responsibility for the sufficiency of the procedures.

  • The auditor's report is issued as a by-product of a financial statement audit and is based on the results of procedures designed to enable the auditor to express an opinion on the financial statements taken as a whole, not to provide assurance on the specific subject matter of the report.

In each instance, the SAS presents the rationale for restricting the use of the report.

Additional help

SAS no. 87 also provides guidance on adding other parties as specified parties in an engagement resulting in a restricted-use report. It prohibits the addition of specified parties in by-product-report engagements, limiting the use of such reports to an entity's audit committee, board of directors, management, others within the organization, specified regulatory agencies and—in the case of reports on compliance with aspects of contractual agreements—to the parties to the contract or agreement.

Auditors combining in one report both an opinion on a presentation that requires a restricted report and an opinion on a presentation that normally does not must restrict the combined report. However, they may include a general-use report in the same document as a separate restricted-use report, without affecting the nature of either. The restricted-use report remains such, without the general-use report's also becoming restricted.

In addition, SAS no. 87 changes the language the literature uses regarding restricted-use reports. For example, the statement replaces the terms restricted distribution and general distribution with the terms restricted use and general use because auditors are not responsible for controlling their clients' distribution of restricted-use reports.

To order this statement (product no. 060689JA), call the AICPA at 888-777-7077.


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