WHEN WOULD AN AUDITOR ISSUE A “REPORT ON COMPLIANCE WITH AGREEMENTS, STATUTES AND REGULATIONS”?
Examples of agreements requiring the auditor to report on compliance under this section include loan agreements or bond indentures which usually impose a variety of restrictive covenants such as: • payments into sinking funds • payments of interest • ratio requirements • restriction of dividend payments • use of proceeds on sale of property When engaged to express an opinion as to the client’s compliance with criteria establish by provision of an agreement, statute or regulation, the auditor should comply with the general and examination standards. In some cases, the scope of the audit of the financial statements may also be sufficient to comply with generally accepted auditing standards in expressing such an opinion. In other cases, including those where the compliance period reported on differs from the period under audit, the auditor will need to perform additional procedures in order to comply with generally accepted auditing standards in expressing such an opinion. The auditor’s r
