Question

Clarify what is meant by the term "special purpose" audit

Answer 1

Answer to the above question:

Special Purpose Audit:

Special purpose audit refers to those circumstances in which the auditor is required to report on specific financial information for specific purpose to specific users, in comparison with the general audit of fiancial statements. Special purpose audit engagements, according to the International Standard on Auditing, include audits of:

• A complete set of financial statements prepared in accordance with another comprehensive basis of accounting.
• A component of a complete set of general purpose or special purpose financial statements, such as a single financial statement, specified accounts, elements of accounts, or items in a financial statement.
• Compliance with contractual agreements.
• Summarized financial statements.

A special purpose audit refers to the auditing of areas such as attorneys accounts and real estate agent's trust accounts. It might also be needed for Royalties and donor fundings. In addition to this, it is sometime needed to audit franchise or licensing agreements and claims made towards incentives in industries such as tourism and manufacturing. New legislation also requires financial planners to obtain audit reports for certain instances.