AUD Prep: FYI - Reporting on Compliance with Requirements in a F/S Audit

(a) The auditor should include a statement that nothing came to the auditor's attention to cause the auditor to believe that the entity failed to comply with the specified aspects of the contractual agreements or regulatory requirements only if: (1) the auditor did not identify any such noncompliance; (2) the auditor expressed an unmodified or qualified opinion on the financial statements involved; and (3) the covenants or regulatory requirements related to accounting matters that have been subjected to procedures applied in the audit.

(b) When Instances of Noncompliance have been Identified—The auditor's report on compliance should describe that noncompliance. Note: If the entity has obtained a waiver for such noncompliance, the auditor may include a statement that a waiver has been obtained; but, all instances of noncompliance must be described in the report, including those for which a waiver has been obtained.

Question

FYI - Reporting on Compliance with Requirements in a F/S Audit

(a) The auditor should include a statement that nothing came to the auditor's attention to cause the auditor to believe that the entity failed to comply with the specified aspects of the contractual agreements or regulatory requirements only if: (1) the auditor did not identify any such noncompliance; (2) the auditor expressed an unmodified or qualified opinion on the financial statements involved; and (3) the covenants or regulatory requirements related to accounting matters that have been subjected to procedures applied in the audit.

(b) When Instances of Noncompliance have been Identified—The auditor's report on compliance should describe that noncompliance. Note: If the entity has obtained a waiver for such noncompliance, the auditor may include a statement that a waiver has been obtained; but, all instances of noncompliance must be described in the report, including those for which a waiver has been obtained.

Monique Tyler · Accepted Answer

(a) When the Auditor has Issued an Adverse Opinion or Disclaimed an Opinion—The auditor should issue a report on compliance only when instances of noncompliance were identified.

**The report on compliance should be in writing and should be presented either as a separate report or may be combined with the auditor's report on the financial statements.**

**Include a paragraph conveying an appropriate alert that restricts the distribution of the report on compliance issues to the specified users.**

**When commenting on compliance with contractual requirements in an audit report on an entity's financial statements, the commentary about compliance should be presented in an other-matter section.**

AUD Prep

Author