Special Considerations—Audits of Financial Statements …

1 Special Considerations Audits of Financial Statements1325AU-C Section 800 Special Considerations Audits of FinancialStatements prepared in Accordance WithSpecial purpose FrameworksSource: SAS No. 122; SAS No. 125; SAS No. 127; SAS No. 132; SASNo. for audits of Financial Statements for periods ending on orafter December 15, 2012, unless otherwise of This sections 200 700 apply to an audit of Financial Statements . Thissection addresses Special considerations in the application of those AU-C sec-tions to an audit of Financial Statements prepared in accordance with a specialpurpose framework, which is a cash, a tax, a regulatory, a contractual, or another basis of accounting.

2 This section does not purport to address all specialconsiderations that may be relevant in the circumstances. (Ref: par..A1 .A5)[As amended, effective for audits of Financial Statements for periods ending onor after December 15, 2012, by SAS No. 127. As amended, effective for audits offinancial Statements prepared in accordance with a Special purpose frameworkfor periods ending on or after December 15, 2021, by SAS No. 139.].02 This section is written in the context of a complete set of Financial state-ments prepared in accordance with a Special purpose framework. Section 805, Special Considerations Audits of Single Financial Statements and SpecificElements, Accounts, or Items of a Financial Statement, addresses Special con-siderations relevant to an audit of a single Financial statement or of a specificelement, account, or item of a Financial 570,The Auditor's Consideration of an Entity's Ability to Con-tinue as a Going Concern, applies to audits of Special purpose Financial state-ments, as discussed in paragraph.

3 14 of this section. [As amended, effective foraudits of Financial Statements prepared in accordance with a Special purposeframework for periods ending on or after December 15, 2021, by SAS No. 139.].04 Section 806,Reporting on Compliance With Aspects of ContractualAgreements or Regulatory Requirements in Connection With Audited FinancialStatements, addresses the auditor's responsibility and the form and content ofthe report when the auditor is requested to report on the entity's compliancewith aspects of contractual agreements or regulatory requirements in connec-tion with the audit of Financial section is effective for audits of Financial Statements for periodsending on or after December 15, 2012.

4 2021, AICPAAU-C objective of the auditor, when applying generally accepted auditingstandards (GAAS) in an audit of Financial Statements prepared in accordancewith a Special purpose framework, is to address appropriately the Special con-siderations that are relevant acceptance of the engagement, planning and performance of that engagement, an opinion and reporting on the Financial purposes of GAAS, the following terms have the meanings at-tributed as follows: Special purpose Financial Statements pre-pared in accordance with a Special purpose purpose Financial reporting frameworkother than generally accepted accounting principles (GAAP) thatis one of the following bases of accounting: (Ref: par.)

5 A6) basis of accounting that the entity uses torecord cash receipts and disbursements and modificationsof the cash basis having substantial support (for example,recording depreciation on fixed assets). basis of accounting that the entity uses tofile its tax return for the period covered by the basis of accounting that the entityuses to comply with the requirements or Financial report-ing provisions of a regulatory agency to whose jurisdictionthe entity is subject (for example, a basis of accounting thatinsurance companies use pursuant to the accounting prac-tices prescribed or permitted by a state insurance commis-sion). basis of accounting that the entityuses to comply with an agreement between the entity andone or more third parties other than the basis of accounting that uses a definite setof logical, reasonable criteria that is applied to all materialitems appearing in Financial cash basis, tax basis, regulatory basis, and other basis of ac-counting are commonly referred to asother comprehensive basesof accounting.

6 [As amended, effective for audits of Financial Statements for periods ending onor after December 15, 2012, by SAS No. 127. As amended, effective for audits offinancial Statements prepared in accordance with a Special purpose frameworkfor periods ending on or after December 15, 2021, by SAS No. 139.].08 Reference tofinancial statementsin this section means "a complete setof Special purpose Financial Statements ."1 The requirements of the applicable1 Paragraphs .14 and .A9 of section 200,Overall Objectives of the Independent Auditor and theConduct of an Audit in Accordance With Generally Accepted Auditing 2021, AICPAS pecial Considerations Audits of Financial Statements1327financial reporting framework determine the presentation, structure, and con-tent of the Financial Statements and what constitutes a complete set of financialstatements.

7 [As amended, effective for audits of Financial Statements preparedin accordance with a Special purpose framework for periods ending on or afterDecember 15, 2021, by SAS No. 139.].09 Reference toGAAPin GAAS means generally accepted account-ing principles promulgated by bodies designated by the Council of theAICPA (Council) pursuant to the "Compliance With Standards Rule" (ET ) and the "Accounting Principles Rule" (ET sec. ) of theAICPA Code of Professional Conduct. [Revised, January 2015, to reflect con-forming changes necessary due to the issuance of the revised AICPA Code ofProfessional Conduct, effective December 15, 2014. As amended, effective foraudits of Financial Statements prepared in accordance with a Special purposeframework for periods ending on or after December 15, 2021, by SAS No.]

8 139.]RequirementsConsiderations When Accepting the EngagementAcceptability of the Financial Reporting Framework (Ref: par..A7 .A10).10 Section 210,Terms of Engagement, requires the auditor to determinethe acceptability of the Financial reporting framework applied in the prepara-tion of the Financial an audit of Special purpose Financial state-ments, the auditor should obtain an understanding purpose for which the Financial Statements are prepared , intended users, steps taken by management to determine that the applicablefinancial reporting framework is acceptable in the for an Audit (Ref: par..A11).11 Section 210 requires the auditor to establish whether the preconditionsfor an audit are present, including determining whether the Financial report-ing framework to be applied in the preparation of the Financial Statements an audit of Special purpose Financial Statements , the auditorshould obtain the agreement of management that it acknowledges and under-stands its responsibility to include all informative disclosures that are appro-priate for the Special purpose framework used to prepare the entity's financialstatements, description of the Special purpose framework, including a sum-mary of significant accounting policies.

9 And how the frameworkdiffers from GAAP, the effects of which need not be disclosures similar to those required by GAAP, in thecase of Special purpose Financial Statements that contain itemsthat are the same as, or similar to, those in Financial statementsprepared in accordance with description of any significant interpretations of the contract onwhich the Special purpose Financial Statements are based, in the2 Paragraph .06aof section 210,Terms of .06 of section 210. 2021, AICPAAU-C Considerationscase of Special purpose Financial Statements prepared in accor-dance with a contractual basis of disclosures beyond those specifically required by theframework that may be necessary for the Special purpose finan-cial Statements to achieve fair presentation.

10 (Ref: par..A12)[As amended, effective for audits of Financial Statements for periods ending onor after December 15, 2012, by SAS No. 127.]Considerations When Planning and Performing the Audit(Ref: par..A13 .A17).12 Section 200,Overall Objectives of the Independent Auditor and the Con-duct of an Audit in Accordance With Generally Accepted Auditing Standards,requires the auditor to comply with all AU-C sections relevant to the planning and performing an audit of Special purpose Financial Statements ,the auditor should adapt and apply all AU-C sections relevant to the audit asnecessary in the circumstances of the 315,Understanding the Entity and Its Environment and As-sessing the Risks of Material Misstatement.