Wiley Practitioner's Guide to GAAS 2015: Covering all SASs, SSAEs, SSARSs, PCAOB Auditing Standards, and Interpretations

AU-C 806 Reporting on Compliance with Aspects of Contractual Agreements or Regulatory Requirements in Connection with Audited Financial Statements

AU-C ORIGINAL PRONOUNCEMENTS

Original Pronouncements

Statements on Auditing Standards (SASs) 122, 125.

AU-C DEFINITIONS OF TERMS

AU-C 806 does not contain any definitions.

OBJECTIVE OF AU-C SECTION 806

AU-C 806.06 states that “the objective of the auditor is to report appropriately on an entity's compliance with aspects of contractual agreements or regulatory requirements, in connection with the audit of financial statements, when the auditor is requested to report on such matters.”

SCOPE

Auditor's reports issued in connection with compliance with aspects of contractual agreements or regulatory requirements related to accounting matters connected with audited financial statements. (AU-C 806.01)

If the auditor is testing compliance with laws and regulations in an audit in accordance with the Government Auditing Standards (the “Yellow Book”) issued by the Comptroller General of the United States or a single audit act in accordance with an office of management budget circular, he or she should follow the guidance in Section 935, Compliance Audits. (AU-C 806.03)

FUNDAMENTAL REQUIREMENTS

Agreements Requiring Compliance Reports

Bond indentures, loan and other agreements, or regulatory agencies may require compliance reports by independent auditors. For example, loan agreements may contain covenants for borrowers, such as ...