(Supersedes Statement on Auditing Standards No. 87, Restricting the Use of an Auditor's Report [AICPA, Professional Standards, A U sec. 532 and AU-C sec. 905])
Scope of This Statement on Auditing Standards
1. This Statement on Auditing Standards (SAS) addresses the auditor's responsibility, when required or the auditor decides, to include in the auditor's report or other written communication issued by the auditor in connection with an engagement conducted in accordance with generally accepted auditing standards (GAAS) (hereinafter referred to in this SAS as auditor's written communication) language that restricts the use of the auditor's written communication. This language is referred to in this SAS as an alert. In an auditor's report, such language is included in an other-matter paragraph. (Ref: par. A1 and A3)
2. Appendix A, "List of AU-C Sections in AICPA Professional Standards Relating to the Restricted Use of the Auditor's Written Communication," identifies AU-C sections in AICPA Professional Standards that contain specific requirements to include an alert that restricts the use of the auditor's written communication or that otherwise address the inclusion of such alerts. Accordingly, the requirements in this SAS regarding the form of such alert apply (Ref: par. A2)
3. This SAS is effective for the auditor's written communications related to audits of financial statements for periods ending on or after December 15, 2012. For all other engagements conducted in accordance with GAAS, this SAS is effective for the auditor's written communications issued on or after December 15, 2012.
4. The objective of the auditor is to restrict the use of the auditor's written communication by including an alert when the potential exists for the auditor's written communication to be misunderstood if taken out of the context in which the auditor's written communication is intended to be used.
5. For purposes of GAAS, the following term has the meaning attributed as follows:
Specified parties. The intended users of the auditor's written communication.
Alert That Restricts the Use of the Auditor's Written Communication
6. The auditor's written communication should include an alert, in a separate paragraph, that restricts its use when the subject matter of the auditor's written communication is based on (Ref: par. A2-A3)
a. measurement or disclosure criteria that are determined by the auditor to be suitable only for a limited number of users who can be presumed to have an adequate understanding of the criteria,
b. measurement or disclosure criteria that are available only to the specified parties, or
c. matters identified by the auditor during the course of the audit engagement when the identification of such matters is not the primary objective of the audit engagement (commonly referred to as a by-product report). (Ref: par. A4-A7)
7. Unless specified otherwise by this SAS or other relevant AU-C sections in AICPA Professional Standards, the alert that restricts the use of the auditor's written communication required by paragraph 6 should
a. state that the auditor's written communication is intended solely for the information and use of the specified parties.
b. identify the specified parties for whom use is intended. In situations covered by paragraph 6(c), the specified parties should only include management, those charged with governance, others within the entity, the parties to the contract or agreement, or the regulatory agencies to whose jurisdiction the entity is subject, as appropriate in the circumstances.
c. state that the auditor's written communication is not intended to be and should not be used by anyone other than the specified parties. (Ref: par. A8-A9)
Adding Other Specified Parties (Ref: par. …