The IAASB released for re-exposure an enhanced International Standard on Auditing (ISA) 720 (Revised), the auditor's responsibilities relating to other information. Comments are requested by 18 July 2014.
The proposed standard clarifies and strengthens the scope and focus of auditor efforts on information included in entities’ annual reports, other than the audited financial statements, and introduces new auditor reporting responsibilities.
"There have been significant developments in recent years in corporate reporting, in particular in relation to the information included in entities’ annual reports. The importance ascribed by users to this other information, and the weight they place on it, have notably increased since ISA 720 was originally issued", commented Prof. Arnold Schilder, IAASB Chairman. "Auditors have certain responsibilities relating to this other information as part of an audit of an entity’s financial statements, and the IAASB is intending to appropriately strengthen them—and users need to know what those responsibilities are."
Under the proposed ISA, the auditor would now be required to perform limited procedures to evaluate the consistency of the other information with the audited financial statements. In addition, while reading the other information, the auditor would be responsible to consider whether there is a material inconsistency between the other information and the auditor’s knowledge obtained during the course of the audit, and to remain alert for other indications that the other information appears to be materially misstated. The terms ‘other information’ and ‘annual report’ are defined and explained in the standard in order to make the scope of the standard as clear as possible, while also enabling its appropriate application in light of differing corporate reporting regimes and practices in a wide variety of jurisdictions and circumstances.
Press release
Exposure draft
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