Standard on Auditing (SA) 720 (Revised)

The Auditor’s Responsibilities Relating to Other Information

Standard on Auditing (SA) 720 (Revised), “The Auditor’s Responsibilities Relating to Other Information” should be read be read in the context of the “Preface to the Standards on Quality Control, Auditing, Review, Other Assurance and Related Services,” which sets out the authority of SAs and SA 200, “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing”.

Standard on Auditing (SA) 720 (Revised) contains the following

Introduction

Scope of this SA

Effective Date

Objectives

Definitions

Requirements

Obtaining the Other Information

Reading and Considering the Other Information

Responding When a Material Inconsistency Appears to Exist or Other Information Appears to Be Materially Misstated

Responding When the Auditor Concludes That a Material Misstatement of the Other Information Exists

Responding When a Material Misstatement in the Financial Statement Exists or Auditor’s Understanding of the Entity and Its Environment Needs to be Updated

Reporting

Documentation

Application and Other Explanatory Material

Definitions

Obtaining the Other Information

Reading and Considering the Other Information

Responding When a Material Inconsistency Appears to Exist or Other Information Appears to Be Materially Misstated

Responding When the Auditor Concludes That a Material Misstatement of the Other Information Exists

Responding When a Material Misstatement in the Financial Statement Exists or the Auditor’s Understanding of the Entity and Its Environment Needs to be Updated Reporting

Material Modifications vis-a-vis Revised ISA 720, “The Auditor’s Responsibilities Relating to Other Information”

Appendix 1: Examples of Amounts or Other Items that May be Included in the Other Information

Appendix 2: Illustrations of Auditor’s Reports Relating to Other Information

Introduction

Scope of this SA

1. Standard on Auditing (SA) 720 (Revised) deals with the auditor’s responsibilities relating to other information, whether financial or non-financial information (other than financial statements and the auditor’s report thereon), included in an entity’s annual report. An entity’s annual report may be a single document or a combination of documents that serve the same purpose.

2. This SA is written in the context of an audit of financial statements by an independent auditor. Accordingly, the objectives of the auditor in this SA are to be understood in the context of the overall objectives of the auditor as stated in paragraph 11 of SA 2001. The requirements in the SAs are designed to enable the auditor to achieve the objectives specified in the SAs, and thereby the overall objectives of the auditor. The auditor’s opinion on the financial statements does not cover the other information, nor does this SA require the auditor to obtain audit evidence beyond that required to form an opinion on the financial statements.

3. This SA requires the auditor to read and consider the other information because other information that is materially inconsistent with the financial statements or the auditor’s knowledge obtained in the audit may indicate that there is a material misstatement of the financial statements or that a material misstatement of the other information exists, either of which may undermine the credibility of the financial statements and the auditor’s report thereon. Such material misstatements may also inappropriately influence the economic decisions of the users for whom the auditor’s report is prepared.

4. This SA may also assist the auditor in complying with relevant ethical requirements2 that require the auditor to avoid being associated with information that the auditor believes contains a materially false or misleading statement, statements or information furnished negligently, or omits or obscures any information required to be included where such omission or obscurity would be misleading.

5. Other information may include amounts or other items that are intended to be the same as, to summarize, or to provide greater detail, about amounts or other items in the financial statements, and other amounts or other items about which the auditor has obtained knowledge in the audit. Other information may also include other matters.

6. The auditor’s responsibilities relating to other information (other than applicable reporting responsibilities) apply regardless of whether the other information is obtained by the auditor prior to, or after, the date of the auditor’s report.

7. This SA does not apply to:

(a) Preliminary announcements of financial information; or

(b) Securities offering documents, including prospectuses.

8. The auditor’s responsibilities under this SA do not constitute an assurance engagement on other information or impose an obligation on the auditor to obtain assurance about the other information.

9. Law or regulation may impose additional obligations on the auditor in relation to other information that are beyond the scope of this SA.

Effective Date

10. This SA is effective for audits of financial statements for periods beginning on or after April 1, 2018.

Objectives

11. The objectives of the auditor, having read the other information, are:

(a) To consider whether there is a material inconsistency between the other information and the financial statements;

(b) To consider whether there is a material inconsistency between the other information and the auditor’s knowledge obtained in the audit;

(c) To respond appropriately when the auditor identifies that such material inconsistencies appear to exist, or when the auditor otherwise becomes aware that other information appears to be materially misstated; and

(d) To report in accordance with this SA.

Download Full Text of Standard on Auditing (SA) 720 (Revised)

GST Course Join

More Under CA, CS, CMA

Posted Under

Category : CA, CS, CMA (3827)
Type : News (13807)
Tags : Auditing Standards (39) ICAI (2674)

Leave a Reply

Your email address will not be published. Required fields are marked *

Featured Posts