SA 800 requires the auditor, before accepting an engagement to report on financial statements prepared under a special purpose framework — such as a cash basis, regulatory basis, or a basis agreed in a contract — to obtain an understanding of the purpose the statements are prepared for, who the intended users are, and what steps management took to determine the framework is acceptable in the circumstances, and then to build that purpose into the auditor's report itself, including an Emphasis of Matter paragraph that the statements may not be suitable for any purpose other than the one described.
What has to be checked before accepting the engagement
- 01Confirm the framework is acceptable for the stated purposeA tax basis or a regulator's prescribed basis is acceptable because an authority defines it; a framework invented ad hoc for one contract needs its own justification.
- 02Understand who the statements are actually forA lender covenant check, a regulatory filing and a specific contractual requirement are each a different special purpose — the engagement terms have to name it specifically, not describe it loosely.
- 03Establish whether management's description of the framework in the statements is adequateThe statements themselves need to describe the basis of accounting clearly enough that a reader isn't misled into assuming it's a general purpose framework.
What the report has to include, specifically
- An opinion that addresses whether the statements are prepared, in all material respects, in accordance with the identified special purpose framework — not the words "true and fair view" unless the framework itself uses that language
- An Emphasis of Matter paragraph alerting users that the framework is a special purpose basis and that the statements may not be suitable for another purpose
- A restriction on distribution or use to the intended users, where the framework is one designed for a limited set of users (e.g. a specific lender or regulator)
Reusing a general purpose audit report template and simply swapping the framework name in the opinion paragraph misses the Emphasis of Matter and distribution-restriction requirements SA 800 adds specifically because special purpose statements are easy to mistake for general purpose ones once they're in circulation.
This is practical guidance written for audit teams, not an authoritative statement of any standard or statute. Standards, forms and timelines change. Check the current text issued by the ICAI and the relevant authority before relying on anything here in an audit file.
Related resources
- Audit workflow & automationSA 700: forming an opinion, and what "true and fair" actually requires concluding onFinishing every planned procedure isn't the same as forming an opinion. SA 700 is the step that happens after the checklist, not instead of it.
- Audit documentationEngagement letters: what SA 210 requiresWhat an engagement letter must establish, when it needs renewing, and the gaps most often found on file inspection — undated letters and stale scope.
- Audit workflow & automationSA 210: what has to be agreed and documented before an audit startsSigning last year's engagement letter forward without re-reading it misses exactly what SA 210 requires you to check again each year.
- Audit workflow & automationSA 705: qualified, adverse or disclaimer — choosing the right modified opinionTwo questions decide which modification applies, and they're genuinely independent of each other — getting one right doesn't tell you the other.
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