Reports on Application of Requirements of Framework

Question 1

Objective

Answer 1

“Reports on Application of Requirements of an Applicable Financial Reporting Framework.” The standard states that the auditor’s objective, when engaged to issue a written report or provide oral advice on the application of the requirements of an applicable financial reporting framework to a specific transaction or on the type of report that may be issued on a specific entity’s financial statements, is to appropriately address: (1) the acceptance of the engagement; (2) the planning and performance of the engagement; and (3) reporting on the specific transaction or type of report.

Question 2

Acceptance Considerations

Answer 2

The reporting accountant should consider the following: (1) the circumstances under which the written report or oral advice is requested; (2) the purpose of the request; and (3) the intended use of the written report or oral advice.

The reporting accountant should not accept any engagement involving a hypothetical transaction.

Question 3

Reporting Structure

Answer 3

A. The report should be addressed to the requesting party and include the following:
1. A description of the engagement and reference to this SAS;
2. Identification of the specific entity, a description of any specific transaction(s), and a statement about the source of information;
3. A statement describing the application of the requirements of an applicable financial reporting framework (and country involved);
4. A statement that management is responsible for the proper accounting treatment and they should consult with their continuing accountants;
5. A statement that any differences in the facts or circumstances may change the report;
6. A restriction that the report is intended solely for the specified parties. (The restricted distribution of the report does not prevent distribution of the report to the continuing accountant.)
B. The requirements associated with written report may be useful when providing oral advice, too.

Question 4

Continuing Accountant discussion

Answer 4

The reporting accountant, however, must consult with the continuing CPA to obtain all of the available facts pertinent to the transaction