OverviewCAS 720, The Auditor's Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements, 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. CAS 720 is written in the context of an audit of financial statements by an independent auditor. Accordingly, the objectives of the auditor in this CAS are to be understood in the context of the overall objectives of the auditor as stated in paragraph 11 of CAS 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Canadian Auditing Standards. The requirements in the CASs are designed to enable the auditor to achieve the objectives specified in the CASs, 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 CAS require the auditor to obtain audit evidence beyond that required to form an opinion on the financial statements. CAS 720 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. History of CAS 720
Note: Our history summary does not take into account consequential amendments made as the result of other projects. Amendments under consideration
Project Status This is a completed project. ObjectiveTo revise ISA 720,The Auditor's Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements to ensure that the ISA continues to be capable of enhancing the credibility of financial statements through specifying appropriate responsibilities of the auditor relating to the range of other information in documents containing audited financial information and taking account of how such information is disseminated. BackgroundDuring the Clarity redrafting of ISA 720 Other Information in Documents Containing Audited Financial Statements, and the consultations on the IAASB's Strategy and Work Program, 2009-2011, several stakeholders drew the IAASB's attention to the need to update and revise the ISA to ensure that it is sufficient and fit-for-purpose in the context of today's financial reporting environment. This view was shared by members of the IAASB Consultative Advisory Group (CAG). The IAASB considered the input received and agreed to include consideration of a proposal to revise ISA 720 in its 2009-2011 work program. The IAASB approved a project proposal at its December 2009 meeting (Agenda Item 9) - As indicated, key issues are likely to include the following:
At its March 2010 meeting, (Agenda Item 5), the IAASB considered issues to be addressed in this project, including the following:
The IAASB CAG discussed a number of these issues at its March 2010 meeting (Agenda Item N). At its September 2010 meeting (Agenda Item 8), the IAASB continued its consideration of issues to be addressed in this project, including the following:
The IAASB CAG discussed a number of these issues at its September 2010 meeting. (Agenda Item M).
At its September 2011 meeting (Agenda Item 5), The IAASB considered a revised draft of ISA 720 (Revised), The Auditor's Responsibilities Relating to Other Information in Documents Containing or Accompanying Audited Financial Statements and Auditor's Report Thereon. Amongst other matters, the IAASB discussed the scope and application of the proposed standard, and the auditor's work effort relating to the other information. At its December 2011 meeting (Agenda Item 11), the IAASB considered a revised draft of proposed ISA 720 (Revised). Topics discussed included: the auditor’s procedures when considering financial data in the other information; the concept of “material inconsistency;” the auditor’s action when other information is identified that is inconsistent with the auditor’s understanding of the entity and its environment; the concept of “initial release” in relation to the intended scope of the proposed standard; and documentation. The IAASB CAG discussed the project at its September 2012 meeting (Agenda Item C). At its September 2012 meeting (Agenda Item 2), the IAASB approved the exposure draft ISA 720, The Auditor's Responsibilities Relating to Other Information in Documents Containing or Accompanying Audited Financial Statements and the Auditor's Report Thereon. The proposed standard broadens and clarifies the scope of documents to be addressed by the auditor, enhances the auditor's work effort, and introduces reporting requirements. At its April 2013 meeting, the IAASB received a brief update on the status of comment letter responses received on the Exposure Draft, Proposed ISA 720 (Revised). At its June 2013 meeting (Agenda Item 5), the IAASB held initial discussions on key issues arising from comment letter responses on the Exposure Draft of proposed ISA 720 (Revised). The IAASB CAG discussed the project at its September 2013 meeting (Agenda Item B) At its September 2013 meeting (Agenda Item 6), the IAASB discussed issues and task force recommendations in response to feedback received on its exposure draft of proposed ISA 720 (Revised). Amongst other matters, the IAASB discussed proposed revised objectives of the auditor, proposed revisions to the scope of the ISA, and proposed revised requirements addressing the auditor’s work effort and reporting. The IAASB CAG discussed the project at its March 2014 meeting (Agenda Item B) At its March 2014 meeting (Agenda Item 2), the IAASB approved for re-exposure proposed ISA 720 (Revised), The Auditor's Responsibilities Relating to Other Information. This re-exposure provides requirements and quidance on the scope of other information, the auditors work effort related to other information, and the auditor's associated reporting responsibilities. At its September 2014 meeting (Agenda Item 7), the IAASB discussed the responses received to proposed ISA 720 (Revised), The Auditor's Responsibilities Relating to Other Information and related Issues. At its October 2014 teleconference, the IAASB discussed issues related to proposed revised ISA 720. At its December 2014 meeting (Agenda Item 2), the IAASB approved ISA 720 (Revised), The Auditor's Responsibilities Relating to Other Information and related cnforming amendments. For the IAASB's post implementation activities, please refer to the Auditor Reporting Implementation page. What is the auditors responsibility for reporting on other information accompanying financial statements?Auditors are required to report on other information only if it is misstated or inconsistent with the financial statements. C) Auditors are required to provide reasonable assurance with respect to whether the other information is presented in accordance with generally accepted accounting principles.
What are the responsibilities of the auditor in audit documentation?The auditor must identify and document any additions to audit documentation as a result of these procedures consistent with the previous paragraph. . 18 The office of the firm issuing the auditor's report is responsible for ensuring that all audit documentation sufficient to meet the requirements of paragraphs .
Is there other information in documents containing audited financial statements?The auditor's responsibility with respect to information in a document does not extend beyond the financial information identified in his report, and the auditor has no obligation to perform any procedures to corroborate other information contained in a document.
When audited financial statements are presented in a client's document containing other information the auditor should?[4] If the entity includes other information in documents containing audited financial statements, the auditor should communicate with those charged with governance the auditor's responsibility with respect to such other information, any procedures performed relating to the other information, and the results.
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