A new International Auditing and Assurance Standards Board (IAASB) re-proposal is intended to clarify and strengthen auditors’ responsibilities related to “other information” that is included in organisations’ annual reports outside the audited financial statements.
The re-proposed International Standard on Auditing 720 (Revised), The Auditor’s Responsibilities Relating to Other Information, would require the auditor to perform limited procedures to evaluate the consistency of the other information with the audited financial statements.
The re-proposal, released last week, would require the auditor to consider whether there is a material inconsistency between the other information and information the auditor learned while conducting the audit. The auditor also would be required to remain alert for other indications that the other information appears to be materially misstated.
IAASB Chairman Arnold Schilder said in a news release that the importance financial statement users place on this other information has increased in recent years.
“Auditors have certain responsibilities relating to this other information as part of an audit of an entity’s financial statements,” he said. “And the IAASB is intending to appropriately strengthen them – and users need to know what those responsibilities are.”
The US Public Company Accounting Oversight Board also is gathering feedback on its own other information proposal, which would require audits to evaluate and report on information that is included in an annual report but is outside the financial statements.
Commenters on a previous IAASB other information proposal in 2012 said the proposal needed to be clarified to prevent divergent practices, according to the IAASB.
The IAASB also seeks comment on the current re-proposal, which can be submitted through July 18th at the board’s website.
—Ken Tysiac (firstname.lastname@example.org) is a CGMA Magazine senior editor.