Page 223 - Internal Auditing Standards

Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts

There are two types of general purpose frameworks: the “fair presentation framework” and the “compliance”
framework.” These frameworks are described in the following exhibit.

Exhibit 17.2-1

Frameworks Description
Fair Presentation A financial reporting framework (such as International Financial Reporting Standards)

Framework that requires compliance with the requirements of the framework, and:
i) Acknowledges explicitly or implicitly that, to achieve fair presentation of
the financial statements, it may be necessary for management to provide

disclosures beyond those specifically required by the framework; or

ii) Acknowledges explicitly that it may be necessary for management to depart
from a requirement of the framework to achieve fair presentation of the
financial statements. Such departures are expected to be necessary only in

extremely rare circumstances.
The auditor reports on whether the financial statements “present fairly, in all

material respects” or “give a true and fair view of” the information that the fi nancial
statements are designed to present.
Compliance A financial reporting framework that requires compliance with the requirements

Framework of the framework, but does not contain the acknowledgements in (i) or (ii) above
for “fair” presentation. The auditor is not required to evaluate whether the fi nancial
statements achieve fair presentation. An example would be a fi nancial reporting
framework stipulated by a law or regulation that is designed to meet the fi nancial
information needs of a wide range of users.

The auditor reports on whether the financial statements are prepared, in all material
respects, in accordance with, for example, “Jurisdiction X Corporations Act.”

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