In this topic 4 sections
Start with the intended use
A special purpose framework serves the financial information needs of specified users. Examples include a permitted contractual reporting basis for a lender or a regulator's prescribed basis. The framework can be either a fair presentation framework or a compliance framework. Special purpose describes the reporting criteria and audience; it does not mean reduced audit assurance.
Before accepting the engagement, understand why the report is prepared, who will use it and how management determined that the framework is acceptable. A label supplied by management does not establish acceptability. The framework must also be available for the entity and purpose under the relevant requirements.
Concept sources: ASA 800, December 2021, paragraphs 1–3, 6–8 and A1–A8 — scope, users and framework acceptance.
Adapt the audit to the particular framework
All relevant auditing standards continue to apply. Materiality reflects the intended users' information needs. An agreed threshold for correcting differences does not replace the auditor's materiality judgement. For reports prepared under a contract, understand significant interpretations made by management: another reasonable interpretation might materially change the reported result.
Concept sources: ASA 800, December 2021, paragraphs 9–10 and A10–A11 — relevant standards, contractual interpretations and materiality.
Build the report around the actual criteria
Apply ASA 700 when forming the opinion and preparing the auditor's report. Evaluate whether the financial report adequately describes its framework, including significant contract interpretations. Describe the report's purpose and, when necessary, its intended users, or refer to a note containing that information. Where management has a choice of frameworks, explain its responsibility for deciding that the chosen framework is acceptable.
| Reporting decision | Practical consequence |
|---|---|
| Is the report prepared under a special purpose framework? | Include the required Emphasis of Matter alert that it may be unsuitable for another purpose. |
| Is there a material departure from that framework or an evidence limitation? | Apply the usual modified-opinion requirements; the special-purpose alert does not cure the problem. |
| Should distribution or use be restricted? | Consider an additional restriction where appropriate and legally available; it is separate from the required alert. |
| Are key audit matters required? | They are not automatically required merely because the entity is listed; ASA 701 applies if law requires KAMs for this report or the auditor elects to communicate them. |
Concept sources: ASA 800, December 2021, paragraphs 11–14 and A13–A16, A20–A21 — report content, required alert and optional restrictions.
The special-purpose warning can accompany an unmodified opinion: it tells readers about suitability for their use. Consider other applicable reporting sections as well. For example, ASA 720 can apply to an accompanying report intended to inform the owners or the particular users about matters in the special purpose financial report. Going-concern descriptions may need adaptation to the reporting basis.
- Establish the purpose and users
- Assess framework acceptability
- Audit against that framework
- Evaluate the framework description
- Form the opinion
- Add the special-purpose alert and other applicable sections
Concept sources: ASA 800, December 2021, A15–A17 — going concern, KAMs and accompanying other information.
Sources and further reading
- ASA 800, December 2021 — Special Purpose Frameworks: paragraphs 8–14 and A10–A21.
- ASA 705, December 2023 — modified-opinion requirements: paragraphs 6–9, applied when the special purpose report is materially misstated or sufficient evidence is unavailable.