The Auditor's Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements
CAS 720
The Auditor's Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements
CAS 720
Definitions
- Other information – Financial and non-financial information included in a document containing audited F/S and the auditor’s report
- Inconsistency – Other information that contradicts information contained in the audited F/S
- Misstatement of fact – Other information that is unrelated to matters appearing in the audited financial statements that is incorrectly stated or presented
Reading Other Information
- Read the other information to identify material inconsistencies with the audited F/S
- Make appropriate arrangements with management or those charged with governance to obtain the other information prior to the date of the auditor’s report
- If it is not possible to obtain prior to the date of the auditor’s report, read other information as soon as practicable
Material Inconsistencies
- If the auditor identifies a material inconsistency, determine whether the audited F/S or the other information needs to be revised
Material Inconsistencies Identified in Other Information Obtained Prior to the Date of the Auditor's Report
- If revision of the audited F/S is necessary and management refuses to make the revision, modify the opinion
- If revision of the other information is necessary and management refuses to make the revision, communicate this matter to those charged with governance and:
- Include in the auditor’s report an Other Matter paragraph describing the material inconsistency
- Withhold the auditor’s report; or
- Withdraw from the engagement
Material Inconsistencies Identified in Other Information Obtained Subsequent to the Date of the Auditor's Report
- If revision of the audited F/S is necessary, follow CAS 560 (Subsequent Events)
- If revision of the other information is necessary and management agrees to make the revision, review the steps taken by management to ensure that individuals in receipt of the previously issued F/S, the auditor’s report, and the other information are informed of the revision
- If revision of the other information is necessary, but management refuses to make the revision, notify those charged with governance
Material Misstatements of Fact
- If the auditor becomes aware of a material misstatement of fact, discuss the matter with management
- If after such discussion, the auditor still considers that there is a material misstatement of fact, ask management to consult with the entity’s lawyer, and the auditor shall consider the advice received
- If the auditor concludes that there is a material misstatement of fact that management refuses to correct, notify those charged with governance