Page 166 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
1C. Standards established by recognised organisation: The applicable financial reporting framework may
encompass the financial reporting standards established by an organisation that is authorised or recognised to
promulgate standards for special purpose financial statements. In that case, those standards will be presumed
acceptable for that purpose if the organisation follows an established and transparent process involving
deliberation and consideration of the views of relevant stakeholders.
2. Attributes of AFRF as per SA 210: The applicable financial reporting framework may encompass the financial
reporting provisions of a contract or sources other than those described in the following paras. The acceptability
of the financial reporting framework in the circumstances of the engagement is determined by considering
whether the framework exhibits attributes normally exhibited by acceptable financial reporting frameworks in
accordance with the requirements of SA 210.
In the case of a special purpose framework, the relative importance to a particular engagement of each of the
attributes normally exhibited by acceptable financial reporting frameworks is a matter of professional judgment.
Example: For example, for purposes of establishing the value of net assets of an entity at the date of its sale, the
vendor and the purchaser may have agreed that very prudent estimates of allowances for uncollectible accounts
receivable are appropriate for their needs, even though such financial information is not neutral when compared
with financial information prepared in accordance with a general purpose framework.
3. Needs of the intended users: In the case of special purpose financial statements, the financial information
needs of the intended users are a key factor in determining the acceptability of the financial reporting framework
applied in the preparation of the financial statements.

(CNO SA800.080) Considerations When Planning and Performing Such Audit
1A. Ethical requirements & SA compliance: SA 200 requires the auditor to comply with (a) relevant ethical
requirements, including those pertaining to independence, relating to financial statement audit engagements,
and (b) all SAs relevant to the audit.
1B. Exception: The auditor is also required to comply with each requirement of an SA unless, in the
circumstances of the audit, the entire SA is not relevant or the requirement is not relevant because it is
conditional and the condition does not exist.
1C. Departure: In exceptional circumstances, the auditor may judge it necessary to depart from a relevant
requirement in an SA by performing alternative audit procedures to achieve the aim of that requirement.
1D. Adjustments: Application of some of the requirements of the SAs in an audit of special purpose financial
statements may require special consideration by the auditor.
For example, in SA 320, judgments about matters that are material to users of the financial statements are based
on the common financial information needs of users as a group. In the case of an audit of special purpose
financial statements, those judgments are based on the financial information needs of the intended users.
2A. Threshold: In the case of special purpose financial statements, management may agree with the intended
users on a threshold below which misstatements identified during the audit will not be corrected or otherwise
adjusted.
2B. Materiality: The existence of such a threshold does not relieve the auditor from the requirement to
determine materiality in accordance with SA 320 for purposes of planning and performing the audit of the special
purpose financial statements.
3A. SA 260: SA 260 (Revised) requires the auditor to determine the appropriate person(s) within the entity’s
governance structure with whom to communicate. It notes that, in some cases, all of those charged with
governance are involved in managing the entity, and the application of the communication requirements is
modified to recognize this position.
3B. May not be same: When a complete set of general-purpose financial statements is also prepared by the entity,
those responsible for the oversight of the preparation of the special purpose financial statements may not be the
same as those charged with governance responsible for the oversight of the preparation of those general purpose
financial statements.

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