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I am a bit confused regarding the “addressee” in the Reports. For example, in Independent auditor’s Report we write “to the Shareholders”.
However, in the Tulip Co’s scenario when it comes to “Assurance report on examination of forecast”, it is written that: “The report is currently addressed to the shareholders of Tulip Co which is not appropriate. The intended users for the report are more likely to be the board of directors.”
Please help me figure this out.
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See on page 8 of the AAA notes:
“The following are the five elements of an assurance engagement:
(1) A three party relationship involving a practitioner, a responsible party and intended users …”
For a statutory/external audit the intended users of the financial statements/auditor’s report are the shareholders/members of the company (or trustees, for example, if it was not a company limited by shares).
But if management is asking for an assurance for their own use, management will be the intended user.