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

AU-C 905 Alert That Restricts the Use of the Auditor's Written Communication

AU-C ORIGINAL PRONUNCEMENT

Original Pronouncement

Statement on Auditing Standards (SAS) 125.

AU-C DEFINITION OF TERM

Source: AU-C 905

Specified parties. The intended users of the auditor's written communication.¹

OBJECTIVES OF AU-C SECTION 905

AU-C Section 905.04 states that:

… 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.

FUNDAMENTAL REQUIREMENTS

Reports Required to be Restricted

AU-C 905 applies to auditor's reports and other written communications issued in connection with a GAAS engagement and requires an alert that restricts the use of the auditor's written communication, in a separate paragraph, when the subject matter of that communication is based on:

1. 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;
2. Measurement or disclosure criteria that are available only to the specified parties; or
3. 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). ...