Reports for Specified Parties
The American Institute of CPAs auditing standards board issued a proposed Statement on Auditing Standards, Restricting the Use of an Auditors Report , that provides guidance to auditors on restricted-use reports. A reports use should be restricted to specified parties if
- The subject matter of the report, or the presentation being
reported on, is based on measurement or disclosure criteria
contained in contractual agreements or regulatory provisions that
are not in accordance with generally accepted accounting principles
or an other comprehensive basis of accounting.
- The report is based on procedures specifically designed and
performed to satisfy the needs of parties who accept responsibility
for the sufficiency of the procedures.
- The report is issued as a by- product of a financial statement audit and not to provide assurance on the specific subject matter of the report. Examples are reports issued under SAS no. 60, Communication of Internal Control Related Matters Noted in an Audit , SAS no. 61, Communications With Audit Committees , and paragraphs 19-21 of SAS no. 62, Special Reports .
The proposed SAS will help auditors determine whether an engagement requires a restricted-use report and how to draft that report, AICPA Technical Manager Judith Sherinsky told the Journal . If approved, the statement will be applicable for reports issued after June 30, 1998, with early application permitted. Copies of the ED are available from the AICPA and may be downloaded from AICPA Online, http://www.aicpa.org. Comments are due in March.