Page 222 - CA Final PARAM Digital Book.

Part 1- SA 800

QNO Meaning of Special purpose framework New Course – (SM23)
800.100 TITANIUM CNO-- SA800.040
SA 800 deals with special considerations applicable in respect of audit of financial statements prepared in
accordance with special purpose framework. Explain, by giving examples, meaning of special purpose
framework.
Answer What is Special Purpose framework?
Definition: SA 800 defines special purpose framework as a financial reporting framework designed to meet
the financial information needs of specific users.
Fair Presentation or Compliance Framework: The financial reporting framework may be a fair presentation
framework or a compliance framework.
Determination of Form and Content: The requirements of the applicable financial reporting framework
determine the form and content of the financial statements. These requirements also dictate what
constitutes a complete set of financial statements.
Examples of Special purpose frameworks are: -
(Shortcut: RCC)
Financial Reporting Provisions by Regulator: Another example is the financial reporting provisions
established by a regulator to meet the requirements of that regulator.
Financial Reporting Provisions of a Contract: The financial reporting provisions of a contract, such as a bond
indenture, a loan agreement, or a project grant, also fall under this category.
Cash basis accounting for Creditors: Examples include the cash receipts and disbursements basis of
accounting for cash flow information that an entity may be requested to prepare for creditors.

QNO Paragraph to Avoid Misuse New Course – (SM23)
800.200 TITANIUM CNO-- SA800.100
CA Lakshmi has prepared a draft audit report for financial statements of X Ltd. prepared in accordance
with financial reporting provisions of a contract with Y Ltd. She has drafted an unmodified opinion to be
given in audit report. Besides, she has also drawn attention in draft audit report to Note “A “to the
financial statements which describes the basis of accounting (under the heading “Basis of accounting”).
How she should ensure that report would not be misused? Draft a suitable para to be included in the
report for this purpose.
Answer 1. SA 800: Reference to SA 800, its full name & its applicable in the given scenario.
2. Concept: Alerting Users of Audit Report & Restriction on Distribution & Use of Audit Report

Usage other than intended: The special purpose financial statements may be used for purposes other
than those for which they were intended. For example, a regulator may require certain entities to place
the special purpose financial statements on public record.
Alerting Users: To avoid misunderstandings, the auditor alerts users of the auditor’s report that the
financial statements are prepared in accordance with a special purpose framework. Therefore, the alerted
financial statements may not be suitable for another purpose

Restriction on Distribution or Use
Restriction on Distribution: In addition to the alert required as discussed above, the auditor may consider
it appropriate to indicate that the auditor’s report is intended solely for the specific users.
Depending on the law or regulation applicable, this may be achieved by restricting the distribution or use
of the auditor’s report.
Expansion of Alert Paragraph: In these circumstances, the paragraph alerting the readers may be
expanded to include these other matters, and the heading modified accordingly.
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