Exposure Draft
Standard on Auditing (SA) 720 (Revised)
The Auditor's Responsibilities Relating to Other
Information
(Last date for comments: February 20, 2017)
Issued by
Auditing and Assurance Standards Board
The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)
New Delhi
Exposure Draft
Standard on Auditing (SA) 720 (Revised)
The Auditor's Responsibilities Relating to Other
Information
Your comments on this Exposure Draft should reach us by February 20, 2017.
Comments are most helpful if they indicate the specific paragraph(s) to which
they relate, contain a clear rationale and, where applicable, provide a suggestion
for alternative wording. The comments should be sent to:
Secretary, Auditing and Assurance Standards Board
The Institute of Chartered Accountants of India
ICAI Bhawan, A-29, Sector-62,
NOIDA, Uttar Pradesh 201 309
Comments can also be e-mailed at: aasb@icai.in
Standard on Auditing (SA) 720 (Revised)
The Auditor's Responsibilities Relating to Other
Information
Contents
Paragraph(s)
Introduction
Scope of this SA ..................................................................................................................... 19
Effective Date ........................................................................................................................... 10
Objectives ............................................................................................................................... 11
Definitions .............................................................................................................................. 12
Requirements
Obtaining the Other Information ............................................................................................... 13
Reading and Considering the Other Information ................................................................ 1415
Responding When a Material Inconsistency Appears to Exist or Other Information
Appears to Be Materially Misstated .......................................................................................... 16
Responding When the Auditor Concludes That a Material Misstatement of the
Other Information Exists ..................................................................................................... 1719
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 ..................... 20
Reporting ........................................................................................................................... 2124
Documentation ......................................................................................................................... 25
Application and Other Explanatory Material
Definitions ....................................................................................................................... A1A10
Obtaining the Other Information .................................................................................... A11A22
Reading and Considering the Other Information ........................................................... A23A38
Responding When a Material Inconsistency Appears to Exist or Other Information
Appears to Be Materially Misstated .............................................................................. A39A43
Responding When the Auditor Concludes That a Material Misstatement of the
Other Information Exists ................................................................................................ A44A50
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 .................. A51
Reporting ...................................................................................................................... A52A59
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
Proposed Standard on Auditing (SA) 720 (Revised), "The Auditor's Responsibilities Relating to
Other Information" should be read in conjunction with SA 200, "Overall Objectives of the
Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing".
Introduction
Scope of this SA
1. This Standard on Auditing (SA) 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 200 1. 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.
1
SA 200, "Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing".
2
The Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI's Code of Ethics), paragraph 110.2.
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
.................
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.
Definitions
12. For purposes of the SAs, the following terms have the meanings attributed below:
(a) Annual report A document, or combination of documents, prepared typically on an
annual basis by management or those charged with governance in accordance with law,
regulation or custom, the purpose of which is to provide owners (or similar stakeholders)
with information on the entity's operations and the entity's financial results and financial
position as set out in the financial statements. An annual report contains or accompanies
the financial statements and the auditor's report thereon and usually includes information
about the entity's developments, its future outlook and risks and uncertainties, a
statement by the entity's governing body, and reports covering governance matters.
(Ref: Para. A1A5)
(b) Misstatement of the other information A misstatement of the other information
exists when the other information is incorrectly stated or otherwise misleading (including
because it omits or obscures information necessary for a proper understanding of a
matter disclosed in the other information). (Ref: Para. A6A7)
(c) Other information Financial or non-financial information (other than financial
statements and the auditor's report thereon) included in an entity's annual report. (Ref:
Para. A8A10)
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Requirements
Obtaining the Other Information
13. The auditor shall: (Ref: Para. A11A22)
(a) Determine, through discussion with management, which document(s) comprises the
annual report, and the entity's planned manner and timing of the issuance of such
document(s);
(b) Make appropriate arrangements with management to obtain in a timely manner and, if
possible, prior to the date of the auditor's report, the final version of the document(s)
comprising the annual report; and
(c) When some or all of the document(s) determined in (a) will not be available until after the
date of the auditor's report, request management to provide a written representation that
the final version of the document(s) will be provided to the auditor when available, and
prior to its issuance by the entity, such that the auditor can complete the procedures
required by this SA. (Ref: Para. A22)
Reading and Considering the Other Information
14. The auditor shall read the other information and, in doing so shall: (Ref: Para. A23A24)
(a) Consider whether there is a material inconsistency between the other information and
the financial statements. As the basis for this consideration, the auditor shall, to evaluate
their consistency, compare selected amounts or other items in the other information (that
are intended to be the same as, to summarize, or to provide greater detail about, the
amounts or other items in the financial statements) with such amounts or other items in
the financial statements; and (Ref: Para. A25A29)
(b) Consider whether there is a material inconsistency between the other information and
the auditor's knowledge obtained in the audit, in the context of audit evidence obtained
and conclusions reached in the audit. (Ref: Para. A30A36)
15. While reading the other information in accordance with paragraph 14, the auditor shall
remain alert for indications that the other information not related to the financial statements or
the auditor's knowledge obtained in the audit appears to be materially misstated. (Ref: Para.
A24, A37A38)
Responding When a Material Inconsistency Appears to Exist or Other Information
Appears to Be Materially Misstated
16. If the auditor identifies that a material inconsistency appears to exist (or becomes aware
that the other information appears to be materially misstated), the auditor shall discuss the
matter with management and, if necessary, perform other procedures to conclude whether:
(Ref: Para. A39A43)
(a) A material misstatement of the other information exists;
(b) A material misstatement of the financial statements exists; or
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(c) The auditor's understanding of the entity and its environment needs to be updated.
Responding When the Auditor Concludes That a Material Misstatement of the
Other Information Exists
17. If the auditor concludes that a material misstatement of the other information exists, the
auditor shall request management to correct the other information. If management:
(a) Agrees to make the correction, the auditor shall determine that the correction has been
made; or
(b) Refuses to make the correction, the auditor shall communicate the matter with those
charged with governance and request that the correction be made.
18. If the auditor concludes that a material misstatement exists in other information obtained
prior to the date of the auditor's report, and the other information is not corrected after
communicating with those charged with governance, the auditor shall take appropriate action,
including: (Ref: Para. A44)
(a) Considering the implications for the auditor's report and communicating with those
charged with governance about how the auditor plans to address the material
misstatement in the auditor's report (see paragraph 22(e)(ii)); or (Ref: Para. A45)
(b) Withdrawing from the engagement, where withdrawal is possible under applicable law or
regulation. (Ref: Para. A46A47)
19. If the auditor concludes that a material misstatement exists in other information obtained
after the date of the auditor's report, the auditor shall:
(a) If the other information is corrected, perform the procedures necessary in the
circumstances; or (Ref: Para. A48)
(b) If the other information is not corrected after communicating with those charged with
governance, take appropriate action considering the auditor's legal rights and
obligations, to seek to have the uncorrected material misstatement appropriately brought
to the attention of users for whom the auditor's report is prepared. (Ref: Para. A49A50)
Responding When a Material Misstatement in the Financial Statements Exists or
the Auditor's Understanding of the Entity and Its Environment Needs to Be
Updated
20. If, as a result of performing the procedures in paragraphs 1415, the auditor concludes
that a material misstatement in the financial statements exists or the auditor's understanding of
the entity and its environment needs to be updated, the auditor shall respond appropriately in
accordance with the other SAs. (Ref: Para. A51)
Reporting
21. The auditor's report shall include a separate section with a heading "Other Information",
or other appropriate heading, when, at the date of the auditor's report:
4
(a) For an audit of financial statements of a listed entity, the auditor has obtained, or expects
to obtain, the other information; or
(b) For an audit of financial statements of an entity other than a listed entity, the auditor has
obtained some or all of the other information. (Ref: Para. A52)
22. When the auditor's report is required to include an Other Information section in
accordance with paragraph 21, this section shall include: (Ref: Para. A53)
(a) A statement that management is responsible for the other information;
(b) An identification of:
(i) Other information, if any, obtained by the auditor prior to the date of the auditor's
report; and
(ii) For an audit of financial statements of a listed entity, other information, if any,
expected to be obtained after the date of the auditor's report;
(c) A statement that the auditor's opinion does not cover the other information and,
accordingly, that the auditor does not express (or will not express) an audit opinion or
any form of assurance conclusion thereon;
(d) A description of the auditor's responsibilities relating to reading, considering and
reporting on other information as required by this SA; and
(e) When other information has been obtained prior to the date of the auditor's report, either:
(i) A statement that the auditor has nothing to report; or
(ii) If the auditor has concluded that there is an uncorrected material misstatement of
the other information, a statement that describes the uncorrected material
misstatement of the other information.
23. When the auditor expresses a qualified or adverse opinion in accordance with SA 705
(Revised),3 the auditor shall consider the implications of the matter giving rise to the modification
of opinion for the statement required in paragraph 22(e). (Ref: Para. A54A58)
Reporting Prescribed by Law or Regulation
24. If the auditor is required by a relevant law or regulation to refer to the other information in the
auditor's report using a specific layout or wording, the auditor's report shall refer to Standards
on Auditing only if the auditor's report includes, at a minimum: (Ref: Para. A59)
(a) Identification of the other information obtained by the auditor prior to the date of the
auditor's report;
(b) A description of the auditor's responsibilities with respect to the other information; and
(c) An explicit statement addressing the outcome of the auditor's work for this purpose.
3
SA 705 (Revised), Modifications to the Opinion in the Independent Auditor's Report.
5
Documentation
25. In addressing the requirements of SA 2304 as it applies to this SA, the auditor shall
include in the audit documentation:
(a) Documentation of the procedures performed under this SA; and
(b) The final version of the other information on which the auditor has performed the work
required under this SA.
***
Application and Other Explanatory Material
Definitions
Annual Report (Ref: Para. 12(a))
A1. Law, regulation or custom may define the content of an annual report, and the name by
which it is to be referred, for entities operating under the relevant law or regulation; however, the
content and the name may vary within an Industry and from one law or regulation to another.
A2. An annual report is typically prepared on an annual basis. However, when the financial
statements being audited are prepared for a period less than or more than a year, an annual
report may also be prepared that covers the same period as the financial statements.
A3. In some cases, an entity's annual report may be a single document and referred to by
the title "annual report" or by some other title. In other cases, law, regulation or custom may
require the entity to report to owners (or similar stakeholders) information on the entity's
operations and the entity's financial results and financial position as set out in the financial
statements (i.e., an annual report) by way of a single document, or by way of two or more
separate documents that in combination serve the same purpose. For example, depending on
the applicable law, regulation or custom, one or more of the following documents may form part
of the annual report:
Management report, management commentary, or operating and financial review or
similar reports by those charged with governance (for example, a directors' report).
Chairman's statement.
Corporate governance statement.
Internal control and risk assessment reports.
For example, in the case of an Indian company, the term Annual Report, will have the same
meaning as assigned to it under the Companies Act, 2013 and the Rules thereunder.
A4. An annual report may be made available to users in printed form, or electronically,
including on the entity's website. A document (or combination of documents) may meet the
definition of an annual report, irrespective of the manner in which it is made available to users.
4
SA 230, Audit Documentation, paragraphs 811.
6
A5. An annual report is different in nature, purpose and content from other reports, such as a
report prepared to meet the information needs of a specific stakeholder group or a report
prepared to comply with a specific regulatory reporting objective (even when such a report is
required to be publicly available). Examples of reports that, when issued as standalone
documents, are not typically part of the combination of documents that comprise an annual
report (subject to law, regulation or custom), and that, therefore, are not other information within
the scope of this SA, include:
Separate industry or regulatory reports (for example, capital adequacy reports), such as
may be prepared in the banking, insurance, and pension industries.
Corporate social responsibility reports.
Sustainability reports.
Diversity and equal opportunity reports.
Product responsibility reports.
Labour practices and working conditions reports.
Human rights reports.
Other regulatory filings with the Government agencies such as the Registrar of
Companies.
Misstatement of the Other Information (Ref: Para. 12(b))
A6. When a particular matter is disclosed in the other information, the other information may
omit or obscure information that is necessary for a proper understanding of that matter. For
example, if the other information purports to address the key performance indicators used by
management, then omission of a key performance indicator used by management could
indicate that the other information is misleading.
A7. The concept of materiality may be discussed in a framework applicable to the other
information and, if so, such a framework may provide a frame of reference for the auditor in
making judgments about materiality under this SA. In many cases, however, there may be no
applicable framework that includes a discussion of the concept of materiality as it applies to the
other information. In such circumstances, the following characteristics provide the auditor with a
frame of reference in determining if a misstatement of the other information is material:
Materiality is considered in the context of the common information needs of users as a
group. The users of the other information are expected to be the same as the users of
the financial statements as such users may be expected to read the other information to
provide context to the financial statements.
Judgments about materiality take into account the specific circumstances of the
misstatement, considering whether users would be influenced by the effect of the
uncorrected misstatement. Not all misstatements will influence the economic decisions
of users.
7
Judgments about materiality involve both qualitative and quantitative considerations.
Accordingly, such judgments may take into account the nature or magnitude of the items
that the other information addresses in the context of the entity's annual report.
Other Information (Ref: Para. 12(c))
A8. Appendix 1 contains examples of amounts or other items that may be included in the
other information.
A9. In some cases, the applicable financial reporting framework may require specific
disclosures but permit them to be located outside of the financial statements.5 As such
disclosures are required by the applicable financial reporting framework, they form part of the
financial statements. Accordingly, they do not constitute other information for the purpose of this
SA.
A10. eXtensible Business Reporting Language (XBRL) tags do not represent other
information as defined in this SA.
Obtaining the Other Information (Ref: Para. 13)
A11. Determining the document(s) that is or comprises the annual report is often clearly
based on law, regulation or custom. In many cases, management or those charged with
governance may have customarily issued a package of documents that together comprise the
annual report, or may have committed to do so. In some cases, however, it may not be clear
which document(s) is or comprises the annual report. In such cases, the timing and purpose of
the documents (and for whom they are intended) are matters that may be relevant to the
auditor's determination of which document(s) is or comprises the annual report.
A12. When the annual report is translated into other languages pursuant to law or regulation
(such as may occur when an entity voluntarily or is required by the relevant law or regulation to
translate the annual report into another language), or when multiple "annual reports" are
prepared under different legislation (for example, when an entity is listed in more than one
jurisdictions), consideration may need to be given as to whether one, or more than one of the
"annual reports" form part of the other information. Local law or regulation may provide further
guidance in this respect.
A13. Management, or those charged with governance, is responsible for preparing the annual
report. The auditor may communicate with management or those charged with governance:
The auditor's expectations in relation to obtaining the final version of the annual report
(including a combination of documents that together comprise the annual report) in a
timely manner prior to the date of the auditor's report such that the auditor ca n complete
the procedures required by this SA before the date of the auditor's report, or if that is not
possible, as soon as practicable and in any case prior to the entity's issuance of such
information.
5
For example, Ind AS 107, Financial Instruments: Disclosures, permits certain disclosures required by the Ind AS to either be given
in the financial statements or incorporated by cross-reference from the financial statements to some other statement, such as a
management commentary or business review report, that is available to users of the financial statements on the same terms as the
financial statements and at the same time.
8
The possible implications when the other information is obtained after the date of the
auditor's report.
A14. The communications referred to in paragraph A13 may be particularly appropriate for
example:
In an initial audit engagement.
When there has been a change in management or those charged with governance.
When other information is expected to be obtained after the date of the auditor's report.
A15. Where those charged with governance are to approve the other information prior to its
issuance by the entity, the final version of such other information is the one that has been
approved by those charged with governance for issuance.
A16. In some cases, the entity's annual report may be a single document to be released, in
accordance with law or regulation or the entity's reporting practice, shortly after the entity's
financial reporting period such that it is available to the auditor prior to the date of the auditor's
report. In other cases, such a document may not be required to be released until a later time, or
at a time of the entity's choosing. There may also be circumstances when the entity's annual
report is a combination of documents, each subject to different requirements or reporting
practice by the entity with respect to the timing of their release.
A17. There may be circumstances when, at the date of the auditor's report, the entity is
considering the development of a document that may be part of the entity's annual report (for
example, a voluntary report to stakeholders) but management is unable to confirm to the auditor
the purpose or timing of such a document. If the auditor is unable to ascertain the purpose or
timing of such a document, the document is not considered other information for purposes of
this SA.
A18. Obtaining the other information in a timely manner prior to the date of the auditor's report
enables any revisions that are found to be necessary to be made to the financial statements, the
auditor's report, or the other information prior to their issuance. The audit engagement letter 6
may make reference to an agreement with management to make available to the auditor the
other information in a timely manner, and if possible prior to the date of the auditor's report.
A19. When other information is only made available to users via the entity's website, the
version of the other information obtained from the entity, rather than directly from the entity's
website, is the relevant document on which the auditor would perform procedures in accordance
with this SA. The auditor has no responsibility under this SA to search for other information,
including other information that may be on the entity's website, nor to perform any procedures to
confirm that other information is appropriately displayed on the entity's website or otherwise has
been appropriately transmitted or displayed electronically.
A20. The auditor is not precluded from dating or issuing the auditor's report if the auditor has
not obtained some or all of the other information.
6
SA 210, Agreeing the Terms of Audit Engagements, paragraph A22.
9
A21. When the other information is obtained after the date of the auditor's report, the a uditor
is not required to update the procedures performed in accordance with paragraphs 6 and 7 of
SA 560.7
A22. SA 5808 establishes requirements and provides guidance on the use of written
representations. The written representation required to be requested by paragraph 13(c)
regarding other information that will be available only after the date of the auditor's report is
intended to support the auditor's ability to complete the procedures required by this SA with
respect to such information. In addition, the auditor may find it useful to request other written
representations, for example, that:
Management has informed the auditor of all the documents that it expects to issue that
may comprise other information;
The financial statements and any other information obtained by the auditor prior to the
date of the auditor's report are consistent with one another, and the other information
does not contain any material misstatements; and
With regard to other information that has not been obtained by the auditor prior to the
date of the auditor's report, that management intends to prepare and issue such other
information and the expected timing of such issuance.
Reading and Considering the Other Information (Ref: Para. 1415)
A23. The auditor is required by SA 2009 to plan and perform the audit with professional
skepticism. Maintaining professional skepticism when reading and considering the other
information includes, for example, recognizing that management may be overly optimistic about
the success of its plans, and being alert to information that may be inconsistent with:
(a) The financial statements; or
(b) The auditor's knowledge obtained in the audit.
A24. In accordance with SA 220,10 the engagement partner is required to take responsibility
for the direction, supervision and performance of the audit engagement in compliance with
professional standards and applicable legal and regulatory requirements. In the context of this
SA, factors that may be taken into account when determining the appropriate engagement team
members to address the requirements of paragraphs 1415, include:
The relative experience of engagement team members.
Whether the engagement team members to be assigned the tasks have the relevant
knowledge obtained in the audit to identify inconsistencies between the other information
and that knowledge.
The degree of judgment involved in addressing the requirements of paragraph 14 15.
For example, performing procedures to evaluate the consistency of amounts in the other
7
SA 560, Subsequent Events.
8
SA 580, Written Representations.
9
SA 200, paragraph 15.
10
SA 220, Quality Control for an Audit of Financial Statements, paragraph 15(a).
10
information that are intended to be the same as amounts in the financial statements may
be carried out by less experienced engagement team members.
Whether, in the case of a group audit, it is necessary to make inquiries of a component
auditor in addressing the other information related to that component.
Considering Whether There is a Material Inconsistency between the Other Information
and the Financial Statements (Ref: Para. 14(a))
A25. Other information may include amounts or other items that are intended to be the same as,
to summarize, or to provide greater detail about, the amounts or other items in the financial
statements. Examples of such amounts or other items may include:
Tables, charts or graphs containing extracts of the financial statements.
A disclosure providing greater detail about a balance or account shown in the financial
statements, such as "Revenue for 20X1 comprised Rs. XXX million from product X and
Rs. YYY million from product Y."
Descriptions of the financial results, such as "Total research and development expense
was Rs. XXX in 20X1."
A26. In evaluating the consistency of selected amounts or other items in the other information
with the financial statements, the auditor is not required to compare all amounts or other items
in the other information that are intended to be the same as, to summarize, or to provide greater
detail about, the amounts or other items in the financial statements, with such amounts or other
items in the financial statements.
A27. Selecting the amounts or other items to compare is a matter of professional judgment.
Factors relevant to this judgment include:
The significance of the amount or other item in the context in which it is presented, which
may affect the importance that users would attach to the amount or other item (for
example, a key ratio or amount).
If quantitative, the relative size of the amount compared with accounts or items in the
financial statements or the other information to which they relate.
The sensitivity of the particular amount or other item in the other information, for
example, share based payments for senior management.
A28. Determining the nature and extent of procedures to address the requirement in
paragraph 14(a) is a matter of professional judgment, recognizing that the auditor's
responsibilities under this SA do not constitute an assurance engagement on the other
information or impose an obligation to obtain assurance about the other information. Examples
of such procedures include:
For information that is intended to be the same as information in the financial
statements, comparing the information to the financial statements.
For information intended to convey the same meaning as disclosures in the financial
statements, comparing the words used and considering the significance of differences in
wording used and whether such differences imply different meanings.
11
Obtaining a reconciliation between an amount within the other information and the
financial statements from management and:
Comparing items in the reconciliation to the financial statements and the other
information; and
Checking whether the calculations within the reconciliation are arithmetically
accurate.
A29. Evaluating the consistency of selected amounts or other items in the other information
with the financial statements includes, when relevant given the nature of the other information,
the manner of their presentation compared to the financial statements.
Considering Whether There is a Material Inconsistency between the Other Information
and the Auditor's Knowledge Obtained in the Audit (Ref: Para. 14(b))
A30. Other information may include amounts or items that are related to the auditor's
knowledge obtained in the audit (other than those in paragraph 14(a)). Examples of such
amounts or items may include:
A disclosure of the units produced, or a table summarizing such production by
geographical region.
A statement that "The company introduced product X and product Y during the year."
A summary of the locations of the entity's major operations, such as "the entity's major
centre of operation is in country X, and there are also operations in countries Y and Z."
A31. The auditor's knowledge obtained in the audit includes the auditor's understanding of the
entity and its environment, including the entity's internal control, obtained in accordance with SA
315.11 SA 315 sets out the auditor's required understanding, which includes such matters as
obtaining an understanding of:
(a) The relevant industry, regulatory, and other external factors;
(b) The nature of the entity;
(c) The entity's selection and application of accounting policies;
(d) The entity's objectives and strategies;
(e) The measurement and review of the entity's financial performance; and
(f) The entity's internal control.
A32. The auditor's knowledge obtained in the audit may also include matters that are
prospective in nature. Such matters may include, for example, business prospects and future
cash flows that the auditor considered when evaluating the assumptions used by management
in performing impairment tests on intangible assets such as goodwill, or when evaluating
management's assessment of the entity's ability to continue as a going concern.
A33. In considering whether there is a material inconsistency between the other information
and the auditor's knowledge obtained in the audit, the auditor may focus on those matters in the
11
SA 315, Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment,
paragraphs 1112.
12
other information that are of sufficient importance that a misstatement of the other information in
relation to that matter could be material.
A34. In relation to many matters in the other information, the auditor's recollection of the audit
evidence obtained and conclusions reached in the audit may be sufficient to enable the auditor
to consider whether there is a material inconsistency between the other information and the
auditor's knowledge obtained in the audit. The more experienced and the more familiar with the
key aspects of the audit the auditor is, the more likely it is that the auditor's recollection of
relevant matters will be sufficient. For example, the auditor may be able to consider whether
there is a material inconsistency between the other information and the auditor's knowledge
obtained in the audit in light of the auditor's recollection of discussions held with management or
those charged with governance or findings from procedures carried out during the audit such as
the reading of board minutes, without the need to take further action.
A35. The auditor may determine that referring to relevant audit documentation or making
inquiries of relevant members of the engagement team or relevant component auditors is
appropriate as a basis for the auditor's consideration of whether a material inconsistency exists.
For example:
When the other information describes the planned cessation of a major product line and,
although the auditor is aware of the planned cessation, the auditor may make inquiries of
the relevant engagement team member who performed the audit procedures in this area
to support the auditor's consideration of whether the description is materially inconsistent
with the auditor's knowledge obtained during the audit.
When the other information describes important details of a lawsuit addressed in the
audit, but the auditor cannot recall them adequately, it may be necessary to refer to the
audit documentation where such details are summarized to support the auditor's
recollection.
A36. Whether, and if so the extent to which, the auditor refers to relevant audit
documentation, or makes inquiries of relevant members of the engagement team or relevant
component auditors is a matter of professional judgment. However, it may not be necessary for
the auditor to refer to relevant audit documentation, or to make inquiries of relevant members of
the engagement team or relevant component auditors about any matter included in the other
information. The group auditor may request the management of the group to require the
concerned component auditor to vet that part of the other information included in the annual
report of the group that relates to the respective component.
Remaining Alert for Other Indications that the Other Information Appears to Be Materially
Misstated (Ref: Para. 15)
A37. Other information may include discussion of matters that are not related to the financial
statements and may also extend beyond the auditor's knowledge obtained in the audit. For
example, the other information may include statements about the entity's greenhouse gas
emissions.
13
A38. Remaining alert for other indications that the other information not related to the financial
statements or the auditor's knowledge obtained in the audit appears to be materially misstated
assists the auditor in complying with relevant ethical requirements that require the auditor to
avoid being associated with other information that the auditor believes contains a materially
false or misleading statement, a statement furnished negligently, or omits or obscures any
necessary information such that the other information is misleading 12. Remaining alert for other
indications that the other information appears to be materially misstated could potentially result
in the auditor identifying such matters as:
Differences between the other information and the general knowledge, apart from the
knowledge obtained in the audit, of the engagement team member reading the other
information that lead the auditor to believe that the other information appears to be
materially misstated; or
An internal inconsistency in the other information that leads the auditor to believe that
the other information appears to be materially misstated.
Responding When a Material Inconsistency Appears to Exist or Other Information
Appears to Be Materially Misstated (Ref: Para. 16)
A39. The auditor's discussion with management about a material inconsistency (or other
information that appears to be materially misstated) may include requesting management to
provide support for the basis of management's statements in the other information. Based on
management's further information or explanations, the auditor may be satisfied that the other
information is not materially misstated. For example, management explanations may indicate
reasonable and sufficient grounds for valid differences of judgment.
A40. Conversely, the discussion with management may provide further information that
supports the auditor's conclusion that a material misstatement of the other information exists.
A41. It may be more difficult for the auditor to challenge management on matters of judgment
than on those of a more factual nature. However, there may be circumstances where the auditor
concludes that the other information contains a statement that is not consistent with the financial
statements or the auditor's knowledge obtained in the audit. These circumstances may raise
doubt about the other information, the financial statements, or the auditor's knowledge obtained
in the audit.
A42. As there is a wide range of possible material misstatements of the other information, the
nature and extent of other procedures the auditor may perform to conclude whether a material
misstatement of the other information exists are matters of the auditor's professional judgment
in the circumstances.
A43. When a matter is unrelated to the financial statements or the auditor's knowledge
obtained in the audit, the auditor may not be able to fully assess management's responses to
the auditor's inquiries. Nevertheless, based on management's further information or
explanations, or following changes made by management to the other information, the auditor
may be satisfied that a material inconsistency no longer appears to exist or that the other
12
ICAI's Code of Ethics, paragraph 110.2.
14
information no longer appears to be materially misstated. When the auditor is unable to
conclude that a material inconsistency no longer appears to exist or that the other information
no longer appears to be materially misstated, the auditor may request management to consult
with a qualified third party (for example, a management's expert or legal counsel). In certain
cases, after considering the responses from management's consultation, the auditor may not be
able to conclude whether or not a material misstatement of the other information exists. Actions
the auditor may then take include one or more of the following:
Obtaining advice from the auditor's legal counsel;
Considering the implications for the auditor's report for example, whether to describe the
circumstances when there is a limitation imposed by management; or
Withdrawing from the audit, where withdrawal is possible under applicable law or
regulation.
Responding When the Auditor Concludes That a Material Misstatement of the
Other Information Exists
Responding When the Auditor Concludes That a Material Misstatement Exists in Other
Information Obtained prior to the Date of the Auditor's Report (Ref: Para. 18)
A44. The actions the auditor takes if the other information is not corrected after
communicating with those charged with governance are a matter of the auditor's professional
judgment. The auditor may take into account whether the rationale given by management and
those charged with governance for not making the correction raises doubt about the integrity or
honesty of management or those charged with governance, such as when the auditor suspects
an intention to mislead. The auditor may also consider it appropriate to seek legal advice. In
some cases, the auditor may be required by law, regulation or the professional standards to
communicate the matter to a regulator. In case of an audit of a company, the auditor would also
need to consider the implications of the existence of such material misstatement vis a vis
requirements of section 143(12) of the Companies Act, 2013 and the Rules thereunder.
Reporting Implications (Ref: Para. 18(a))
A45. In rare circumstances, a disclaimer of opinion on the financial statements may be
appropriate when the refusal to correct the material misstatement of the other information casts
such doubt on the integrity of management and those charged with governance as to call into
question the reliability of audit evidence in general.
Withdrawal from the Engagement (Ref: Para. 18(b))
A46. Withdrawal from the engagement, where withdrawal is possible under applicable law or
regulation, may be appropriate when the circumstances surrounding the refusal to correct the
material misstatement of the other information cast such doubt on the integrity of management
and those charged with governance as to call into question the reliability of representations
obtained from them during the audit.
15
Considerations specific to certain entities (Ref: Para. 18(b))
A47. In case of certain entities, such as Central/State government and related government
entities (for example agencies, board, commissions), withdrawal from the engagement may not
be possible. In such cases, the auditor may issue a report to the legislature providing details of
the matter or may take other appropriate actions.
Responding When the Auditor Concludes That a Material Misstatement Exists in Other
Information Obtained after the Date of the Auditor's Report (Ref: Para. 19)
A48. If the auditor concludes that a material misstatement exists in other information obtained
after the date of the auditor's report, and such a material misstatement has been corrected, the
auditor's procedures necessary in the circumstances include determining that the correction has
been made (in accordance with paragraph 17(a)) and may include reviewing the steps taken by
management to communicate with those in receipt of the other information, if previously issued,
to inform them of the revision.
A49. If those charged with governance do not agree to revise the other information, taking
appropriate action to seek to have the uncorrected misstatement appropriately brought to the
attention of users for whom the auditor's report is prepared requires the exercise of professional
judgment, and may be affected by relevant law or regulation. Accordingly, the auditor may
consider it appropriate to seek legal advice about the auditor's legal rights and obligations.
A50. When a material misstatement of the other information remains uncorrected, appropriate
actions that the auditor may take to seek to have the uncorrected material misstatement
appropriately brought to the attention of users for whom the auditor's report is prepared, when
permitted by law or regulation, include, for example:
Providing a new or amended auditor's report to management including a modified
section in accordance with paragraph 22, and requesting management to provide this
new or amended auditor's report to users for whom the auditor's report is prepared. In
doing so, the auditor may need to consider the effect, if any, on the date of the new or
amended auditor's report, in view of the requirements of the SAs or applicable law or
regulation. The auditor may also review the steps taken by management to provide the
new or amended auditor's report to such users;
Bringing the material misstatement of the other information to the attention of the users
for whom the auditor's report is prepared (for example, by addressing the matter in a
general meeting of shareholders);
Communicating with a regulator or relevant professional body about the uncorrected
material misstatement; or
Considering the implications for engagement continuance (see also paragraph A46).
Responding When a Material Misstatement in the Financial Statements Exists or
the Auditor's Understanding of the Entity and Its Environment Needs to Be
Updated (Ref: Para. 20)
A51. In reading the other information, the auditor may become aware of new information that
has implications for:
16
The auditor's understanding of the entity and its environment and, accordingly, may
indicate the need to revise the auditor's risk assessment.13
The auditor's responsibility to evaluate the effect of identified misstatements on the audit
and of uncorrected misstatements, if any, on the financial statements.14
The auditor's responsibilities relating to subsequent events.15
Reporting (Ref: Para. 2124)
A52. For an audit of financial statements of an entity other than a listed entity, the auditor may
consider that the identification in the auditor's report of other information that the auditor expects
to obtain after the date of the auditor's report would be appropriate in order to provide additional
transparency about the other information that is subject to the auditor's responsibilities under
this SA. The auditor may consider it appropriate to do so, for example, when management is
able to represent to the auditor that such other information will be issued after the date of the
auditor's report.
Illustrative Statements (Ref: Para. 2122)
A53. Illustrative examples of the "Other Information" section of the auditor's report are
included in Appendix 2.
Reporting Implications When the Auditor's Opinion on the Financial Statements is
Qualified or Adverse (Ref: Para. 23)
A54. A qualified or adverse auditor's opinion on the financial statements may not have an
impact on the statement required by paragraph 22(e) if the matter in respect of which the
auditor's opinion has been modified is not included or otherwise addressed in the other
information and the matter does not affect any part of the other information. For example, a
qualified opinion on the financial statements because of non-disclosure of directors'
remuneration as required by the applicable financial reporting framework may have no
implications for the reporting required under this SA. In other circumstances, there may be
implications for such reporting as described in paragraphs A55A58.
Qualified Opinion Due to a Material Misstatement in the Financial Statements
A55. In circumstances when the auditor's opinion is qualified, consideration may be given as
to whether the other information is also materially misstated for the same matter as, or a related
matter to, the matter giving rise to the qualified opinion on the financial statements.
Qualified Opinion Due to Limitation of Scope
A56. When there is a limitation of scope with respect to a material item in the financial
statements, the auditor will not have obtained sufficient appropriate audit evidence about that
matter. In these circumstances, the auditor may be unable to conclude whether or not the
amounts or other items in the other information related to this matter result in a material
13
SA 315, paragraphs 11, 31 and A1.
14
SA 450, Evaluation of Misstatements Identified during the Audit.
15
SA 560, paragraphs 10 and 14.
17
misstatement of the other information. Accordingly, the auditor may need to modify the
statement required by paragraph 22(e) to refer to the auditor's inability to consider
management's description of the matter in the other information in respect of which the auditor's
opinion on the financial statements has been qualified as explained in the Basis for Qualified
Opinion paragraph. The auditor is nevertheless required to report any other uncorrected
material misstatements of the other information that have been identified.
Adverse Opinion
A57. An adverse opinion on the financial statements relating to a specific matter(s) described
in the Basis for Adverse Opinion paragraph does not justify the omission of reporting of material
misstatements of the other information that the auditor has identified in the auditor's report in
accordance with paragraph 22(e)(ii). When an adverse opinion has been expressed on the
financial statements, the auditor may need to appropriately modify the statement required by
paragraph 22(e) for example, to indicate that amounts or items in the other information is
materially misstated for the same matter as, or a related matter to, the matter giving rise to the
adverse opinion on the financial statements.
Disclaimer of Opinion
A58. When the auditor disclaims an opinion on the financial statements, providing further
details about the audit, including a section to address other information may overshadow the
disclaimer of opinion on the financial statements as a whole. Accordingly, in those
circumstances, as required by SA 705 (Revised), the auditor's report does not include a section
addressing the reporting requirements under this SA.
Reporting Prescribed by Law or Regulation (Ref: Para. 24)
A59. SA 20016 explains that the auditor may be required to comply with legal or regulatory
requirements in addition to the SAs. Where this is the case, the auditor may be obliged to use a
specific layout or wording in the auditor's report that differs from that described in this SA.
Consistency in the auditor's report, when the audit has been conducted in accordance with SAs,
promotes credibility in the global marketplace by making more readily identifiable those audits
that have been conducted in accordance with globally recognized standards. When the
differences between the legal or regulatory requirements to report with respect to the other
information and this SA relate only to the layout and wording in the auditor's report and, at a
minimum, each of the elements identified in paragraph 24 is included in the auditor's report, the
auditor's report may refer to Standards on Auditing. Accordingly, in such circumstances the
auditor is considered to have complied with the requirements of this SA, even when the layout
and wording used in the auditor's report are specified by legal or regulatory reporting
requirements.
16
SA 200, paragraph A55.
18
Appendix 1
(Ref: Para. 14, A8)
Examples of Amounts or Other Items that May Be Included in the
Other Information
The following are examples of amounts and other items that may be included in other
information. This list is not intended to be exhaustive.
Amounts
Items in a summary of key financial results, such as net income, earnings per share,
dividends, sales and other operating revenues, and purchases and operating expenses.
Selected operating data, such as income from continuing operations by major operating
area, or sales by geographical segment or product line.
Special items, such as asset dispositions, litigation provisions, asset impairments, tax
adjustments, environmental remediation provisions, and restructuring and reorganization
expenses.
Liquidity and capital resource information, such as cash, cash equivalents and
marketable securities; dividends; and debt, capital lease and minority interest
obligations.
Capital expenditures by segment or division.
Amounts involved in, and related financial effects of, off-balance sheet arrangements.
Amounts involved in guarantees, contractual obligations, legal or environmental claims,
and other contingencies.
Financial measures or ratios, such as gross margin, return on average capital employed,
return on average shareholders' equity, current ratio, interest coverage ratio and debt
ratio. Some of these may be directly reconcilable to the financial statements.
Other Items
Explanations of critical accounting estimates and related assumptions.
Identification of related parties and descriptions of transactions with them.
Articulation of the entity's policies or approach to manage commodity, foreign exchange
or interest rate risks, such as through the use of forward contracts, interest rate swaps,
or other financial instruments.
Descriptions of the nature of off-balance sheet arrangements.
Descriptions of guarantees, indemnifications, contractual obligations, litigation or
environmental liability cases, and other contingencies, including management's
qualitative assessments of the entity's related exposures.
19
Descriptions of changes in legal or regulatory requirements, such as new tax or
environmental regulations, that have materially impacted the entity's operations or fiscal
position, or will have a material impact on the entity's future financial prospects.
Management's qualitative assessments of the impacts of new financial reporting
standards that have come into effect during the period, or will come into effect in the
following period, on the entity's financial results, financial position and cash flows.
General descriptions of the business environment and outlook.
Overview of strategy.
Descriptions of trends in market prices of key commodities or raw materials.
Contrasts of supply, demand and regulatory circumstances between geographic regions.
Explanations of specific factors influencing the entity's profitability in specific segments.
20
Appendix 2
(Ref: Para. 21-22, A53)
Illustrations of Auditor's Reports Relating to Other Information
Illustration 1: An auditor's report of a company, whether listed or unlisted, containing an
unmodified opinion when the auditor has obtained all of the other information prior to the
date of the auditor's report and has not identified a material misstatement of the other
information.
Illustration 2: An auditor's report of a listed company containing an unmodified opinion when
the auditor has obtained part of the other information prior to the date of the auditor's report,
has not identified a material misstatement of the other information, and expects to obtain
other information after the date of the auditor's report.
Illustration 3: An auditor's report of an entity other than a listed company containing an
unmodified opinion when the auditor has obtained part of the other information prior to the
date of the auditor's report, has not identified a material misstatement of the other
information, and expects to obtain other information after the date of the auditor's report.
Illustration 4: An auditor's report of a listed company containing an unmodified opinion when
the auditor has obtained no other information prior to the date of the auditor's report but
expects to obtain other information after the date of the auditor's report.
Illustration 5: An auditor's report of a company, whether listed or unlisted, containing an
unmodified opinion when the auditor has obtained all of the other information prior to the
date of the auditor's report and has concluded that a material misstatement of the other
information exists.
Illustration 6: An auditor's report of a company, whether listed or unlisted, containing a
qualified opinion when the auditor has obtained all of the other information prior to the date
of the auditor's report and there is a limitation of scope with respect to a material item in the
consolidated financial statements which also affects the other information.
Illustration 7: An auditor's report of a company, whether listed or unlisted, containing an
adverse opinion when the auditor has obtained all of the other information prior to the date
of the auditor's report and the adverse opinion on the consolidated financial statements also
affects the other information.
21
Illustration 1 An auditor's report of a company, whether listed or unlisted, containing an
unmodified opinion when the auditor has obtained all of the other information prior to the
date of the auditor's report and has not identified a material misstatement of the other
information.
For purposes of this illustrative auditor's report, the following circumstances are assumed:
Audit of a complete set of financial statements of a company, whether listed or unlisted
(registered under the Companies Act, 2013) using a fair presentation framework. The audit
is not a group audit (i.e., SA 60017 does not apply).
The financial statements are prepared by management of the company in accordance with
the Accounting Standards prescribed under Section 133 of the Companies Act, 2013.
The terms of the audit engagement reflect the description of management's responsibility for
the financial statements in SA 210.
The auditor has concluded an unmodified (i.e., "clean") opinion is appropriate based on the
audit evidence obtained.
The relevant ethical requirements that apply to the audit comprise the Code of Ethics issued
by ICAI together with the other relevant ethical requirements relating to the audit and the
auditor refers to both.
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty
does not exist related to events or conditions that may cast significant doubt on the entity's
ability to continue as a going concern in accordance with SA 570 (Revised).18
Key audit matters have been communicated in accordance with SA 701.19
The auditor has obtained all of the other information prior to the date of the auditor's report
and has not identified a material misstatement of the other information.
Those responsible for oversight of the financial statements differ from those responsible for
the preparation of the financial statements.
In addition to the audit of the financial statements, the auditor has other reporting
responsibilities required under the Companies Act, 2013.
INDEPENDENT AUDITOR'S REPORT
To the Members of ABC Company Limited
Report on the Audit of the Standalone Financial Statements20
Opinion
We have audited the standalone financial statements of ABC Company Limited ("the
Company"), which comprise the balance sheet as at 31st March 20XX, and the statement of
17
SA 600, Using the Work of Another Auditor.
18
SA 570 (Revised), Going Concern
19
SA 701, Communicating Key Audit Matters in the Independent Auditor's Report. The Key Audit Matters section is required for
listed entities only.
20
The sub-title "Report on the Audit of the Standalone Financial Statements" is unnecessary in circumstances when the second
sub-title "Report on Other Legal and Regulatory Requirements" is not applicable.
22
profit and loss, (statement of changes in equity)21 and statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting
policies and other explanatory information [in which are included the returns for the year ended
on that date audited by the branch auditors of the company's branches located at (location of
branches)]22.
In our opinion and to the best of our information and according to the explanations given to us,
the aforesaid standalone financial statements give the information required by the Act in the
manner so required and give a true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as at March 31, 20XX, and
profit/loss, (changes in equity)23 and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under
section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are
further described in the Auditor's Responsibilities for the Audit of the Financial Statements
section of our report. We are independent of the Company in accordance with the Code of
Ethics issued by the Institute of Chartered Accountants of India together with the ethical
requirements that are relevant to our audit of the financial statements under the provisions of
the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the Code of Ethics. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters24
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
[Description of each key audit matter in accordance with SA 701.]
Other Information [or another title if appropriate, such as "Information Other than the
Financial Statements and Auditor's Report Thereon"]
The Company's Board of Directors is responsible for the other information. The other
information comprises the [information included in the X report,25 but does not include the
financial statements and our auditor's report thereon.]
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
21
Where applicable.
22
Where applicable.
23
Where applicable.
24
The Key Audit Matters section is required for listed entities only.
25
A more specific description of the other information, such as "the management report and chairman's statement," may be used t o
identify the other information.
23
with the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
[Reporting in accordance with SA 700 (Revised)26 see Illustration 1 in SA 700 (Revised).]
Auditor's Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with SA 700 (Revised) see Illustration 1 in SA 700 (Revised).]
Other Matter27
We did not audit the financial statements/information of ________(number) branches included
in the standalone financial statements of the Company whose financial statements / financial
information reflect total assets of Rs.______ as at 31st March, 20XX and total revenues of
Rs._______ for the year ended on that date, as considered in the standalone financial
statements. The financial statements/information of these branches have been audited by the
branch auditors whose reports have been furnished to us, and our opinion in so far as it relates
to the amounts and disclosures included in respect of these branches, is based solely on the
report of such branch auditors.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
Reporting in accordance with SA 700 (Revised) see Illustration 1 in SA 700 (Revised).]
26
SA 700 (Revised), Forming an Opinion and Reporting on Financial Statements.
27
Where applicable.
24
Illustration 2 An auditor's report of a listed company containing an unmodified opinion
when the auditor has obtained part of the other information prior to the date of the
auditor's report, has not identified a material misstatement of the other information, and
expects to obtain other information after the date of the auditor's report.
For purposes of this illustrative auditor's report, the following circumstances are assumed:
Audit of a complete set of financial statements of a listed company (registered under the
Companies Act, 2013) using a fair presentation framework. The audit is not a group audit
(i.e., SA 600 does not apply).
The financial statements are prepared by management of the company in accordance with
the Accounting Standards prescribed under Section 133 of the Companies Act 2013.
The terms of the audit engagement reflect the description of management's responsibility for
the financial statements in SA 210.
The auditor has concluded an unmodified (i.e., "clean") opinion is appropriate based on the
audit evidence obtained.
The relevant ethical requirements that apply to the audit comprise the Code of Ethics issued
by ICAI together with the other relevant ethical requirements relating to the audit and the
auditor refers to both.
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty
does not exist related to events or conditions that may cast significant doubt on the entity's
ability to continue as a going concern in accordance with SA 570 (Revised).
Key audit matters have been communicated in accordance with SA 701.
The auditor has obtained part of the other information prior to the date of the auditor's
report, has not identified a material misstatement of the other information, and expects to
obtain other information after the date of the auditor's report.
Those responsible for oversight of the financial statements differ from those responsible for
the preparation of the financial statements.
In addition to the audit of the financial statements, the auditor has other reporting
responsibilities required under the Companies Act, 2013.
INDEPENDENT AUDITOR'S REPORT
To the Members of ABC Company Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of ABC Company Limited ("the
Company"), which comprise the balance sheet as at 31st March 20XX, and the statement of
profit and loss, (statement of changes in equity)28 and statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting
28
Where applicable.
25
policies and other explanatory information [in which are included the returns for the year ended
on that date audited by the branch auditors of the company's branches located at (location of
branches)]29.
In our opinion and to the best of our information and according to the explanations given to us,
the aforesaid standalone financial statements give the information required by the Act in the
manner so required and give a true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as at March 31, 20XX, and
profit/loss, (changes in equity)30 and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under
section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are
further described in the Auditor's Responsibilities for the Audit of the Financial Statements
section of our report. We are independent of the Company in accordance with the Code of
Ethics issued by the Institute of Chartered Accountants of India together with the ethical
requirements that are relevant to our audit of the financial statements under the provisions of
the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the Code of Ethics. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
[Description of each key audit matter in accordance with SA 701.]
Other Information [or another title if appropriate, such as "Information Other than
the Financial Statements and Auditor's Report Thereon"]
The Company's Board of Directors is responsible for the other information. The other
information comprises the X report31 (but does not include the financial statements and our
auditor's report thereon), which we obtained prior to the date of this auditor's report, and the Y
report, which is expected to be made available to us after that date.
Our opinion on the financial statements does not cover the other information and we do not and
will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
29
Where applicable.
30
Where applicable
31
A more specific description of the other information, such as "the management report and chairman's statement," may be used to
identify the other information
26
If, based on the work we have performed on the other information that we obtained prior to the
date of this auditor's report, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
[When we read the Y report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to those charged with governance and [ describe actions
applicable under the applicable laws and regulations]]32
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
[Reporting in accordance with SA 700 (Revised) see Illustration 1 in SA 700 (Revised).]
Auditor's Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with SA 700 (Revised) see Illustration 1 in SA 700 (Revised).]
Other Matter33
We did not audit the financial statements/information of ________(number) branches included
in the standalone financial statements of the Company whose financial statements / financial
information reflect total assets of Rs.______ as at 31st March, 20XX and total revenues of
Rs._______ for the year ended on that date, as considered in the standalone financial
statements. The financial statements/information of these branches have been audited by the
branch auditors whose reports have been furnished to us, and our opinion in so far as it relates
to the amounts and disclosures included in respect of these branches, is based solely on the
report of such branch auditors.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with SA 700 (Revised) see Illustration 1 in SA 700 (Revised).]
32
This additional paragraph may be useful when the auditor has identified an uncorrected material misstatement of the other
information obtained after the date of the auditor's report and has a legal obligation to take specific action in response.
33
Where applicable.
27
Illustration 3 An auditor's report of an entity other than a listed company containing an
unmodified opinion when the auditor has obtained part of the other information prior to
the date of the auditor's report, has not identified a material misstatement of the other
information, and expects to obtain other information after the date of the auditor's report.
For purposes of this illustrative auditor's report, the following circumstances are assumed:
Audit of a complete set of financial statements of an entity other than a listed company using
a fair presentation framework. The audit is not a group audit (i.e., SA 600 does not apply).
The financial statements are prepared by management of the entity in accordance with the
Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI).
The terms of the audit engagement reflect the description of management's responsibility for
the financial statements in SA 210.
The auditor has concluded an unmodified (i.e., "clean") opinion is appropriate based on the
audit evidence obtained.
The relevant ethical requirements that apply to the audit are the Code of Ethics issued by
ICAI34.
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty
does not exist related to events or conditions that may cast significant doubt on the entity's
ability to continue as a going concern in accordance with SA 570 (Revised).
The auditor is not required, and has otherwise not decided, to communicate key audit
matters in accordance with SA 701.
The auditor has obtained part of the other information prior to the date of the auditor's
report, has not identified a material misstatement of the other information, and expects to
obtain other information after the date of the auditor's report.
Those responsible for oversight of the financial statements differ from those responsible for
the preparation of the financial statements.
The auditor has no other reporting responsibilities required under local law.
INDEPENDENT AUDITOR'S REPORT
To the Partners of ABC & Associates [or Other Appropriate Addressee]
Opinion
We have audited the financial statements of ABC & Associates (the entity), which comprise the
balance sheet as at March 31st 20XX, and the profit and loss account, (and statement of cash
flows)35 for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial
position of the entity as at March 31, 20XX, and of its financial performance (and its cash
34
Specify any applicable ethical requirements under the relevant laws or regulations applicable to the entity.
35
Where applicable.
28
flows)36 for the year then ended in accordance with the Accounting Standards issued by ICAI.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) issued by ICAI.
Our responsibilities under those standards are further described in the Auditor's Responsibilities
for the Audit of the Financial Statements section of our report. We are independent of the entity
in accordance with the ethical requirements that are relevant to our audit of the financial
statements, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Other Information [or another title if appropriate, such as "Information Other than
the Financial Statements and Auditor's Report Thereon"]
Management37 is responsible for the other information. The other information obtained at the
date of this auditor's report is [information included in the X report,38 but does not include the
financial statements and our auditor's report thereon]
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of
this auditor's report, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
[Reporting in accordance with SA 700 (Revised) see Illustration 4 in SA 700 (Revised).]
Auditor's Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with SA 700 (Revised) see Illustration 4 in SA 700 (Revised).]
36
Where applicable
37
Or other terms that are appropriate in the context of the legal framework applicable to the entity.
38
A more specific description of the other information, such as "the management report and chairman's statement," may be used to
identify the other information.
29
Illustration 4 An auditor's report of a listed company containing an unmodified opinion
when the auditor has obtained no other information prior to the date of the auditor's report
but expects to obtain other information after the date of the auditor's report.
For purposes of this illustrative auditor's report, the following circumstances are assumed:
· Audit of a complete set of financial statements of a listed company (registered under the
Companies Act, 2013) using a fair presentation framework. The audit is not a group audit
(i.e., SA 600 does not apply).
· The financial statements are prepared by management of the company in accordance with
the Accounting Standards prescribed under Section 133 of the Companies Act, 2013.
· The terms of the audit engagement reflect the description of management's responsibility
for the financial statements in SA 210.
· The auditor has concluded an unmodified (i.e., "clean") opinion is appropriate based on
the audit evidence obtained.
· The relevant ethical requirements that apply to the audit comprise the Code of Ethics
issued by ICAI together with the other relevant ethical requirements relating to the audit
and the auditor refers to both.
· Based on the audit evidence obtained, the auditor has concluded that a material
uncertainty does not exist related to events or conditions that may cast significant doubt
on the entity's ability to continue as a going concern in accordance with SA 570 (Revised).
· Key audit matters have been communicated in accordance with SA 701.
· The auditor has obtained no other information prior to the date of the auditor's report but
expects to obtain other information after the date of the auditor's report.
· Those responsible for oversight of the financial statements differ from those responsible
for the preparation of the financial statements.
· In addition to the audit of the financial statements, the auditor has other reporting
responsibilities required under the Companies Act, 2013.
INDEPENDENT AUDITOR'S REPORT
To the Members of ABC Company Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of ABC Company Limited ("the
Company"), which comprise the balance sheet as at 31st March 20XX, and the statement of
profit and loss, (statement of changes in equity)39 and statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting
policies and other explanatory information [in which are included the returns for the year ended
39
Where applicable.
30
on that date audited by the branch auditors of the Company's branches located at (location of
branches)]40.
In our opinion and to the best of our information and according to the explanations given to us,
the aforesaid standalone financial statements give the information required by the Act in the
manner so required and give a true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as at March 31, 20XX, and
profit/loss, (changes in equity)41 and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under
section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are
further described in the Auditor's Responsibilities for the Audit of the Financial Statements
section of our report. We are independent of the Company in accordance with the Code of
Ethics issued by the Institute of Chartered Accountants of India together with the ethical
requirements that are relevant to our audit of the financial statements under the provisions of
the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the Code of Ethics. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
[Description of each key audit matter in accordance with SA 701.]
Other Information [or another title if appropriate, such as "Information Other than
the Financial Statements and Auditor's Report Thereon"]
The Company's Board of Directors is responsible for the other information. The other
information comprises the [information included in the X report42, but does not include the
financial statements and our auditor's report thereon]. The X report is expected to be made
available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and we will not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information identified above when it becomes available and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated.
[When we read the X report, if we conclude that there is a material misstatement therein, we are
40
Where applicable.
41
Where applicable
42
A more specific description of the other information, such as "the management report and chairman's statement," may be used to
identify the other information
31
required to communicate the matter to those charged with governance and (describe actions
applicable in the applicable laws and regulations).]43
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
[Reporting in accordance with SA 700 (Revised) see Illustration 1 in SA 700 (Revised).]
Auditor's Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with SA 700 (Revised) see Illustration 1 in SA 700 (Revised).]
Other Matter44
We did not audit the financial statements/information of ________(number) branches included
in the standalone financial statements of the Company whose financial statements / financial
information reflect total assets of Rs.______ as at 31st March, 20XX and total revenues of
Rs._______ for the year ended on that date, as considered in the standalone financial
statements. The financial statements/information of these branches have been audited by the
branch auditors whose reports have been furnished to us, and our opinion in so far as it relates
to the amounts and disclosures included in respect of these branches, is based solely on the
report of such branch auditors.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with SA 700 (Revised) see Illustration 1 in SA 700 (Revised).]
43
This additional paragraph may be useful when the auditor has identified an uncorrected material misstatement of the other
information obtained after the date of the auditor's report and has a legal obligation to take specific action in response.
44
Where applicable.
32
Illustration 5 An auditor's report of a company, whether listed or unlisted, containing an
unmodified opinion when the auditor has obtained all of the other information prior to the
date of the auditor's report and has concluded that a material misstatement of the other
information exists.
For purposes of this illustrative auditor's report, the following circumstances are assumed:
Audit of a complete set of financial statements of a company, whether listed or unlisted
(registered under the Companies Act, 2013) using a fair presentation framework. The audit
is not a group audit (i.e., SA 600 does not apply).
The financial statements are prepared by management of the company in accordance with
the Accounting Standards prescribed under Section 133 of the Companies Act, 2013.
The terms of the audit engagement reflect the description of management's responsibility for
the financial statements in SA 210.
The auditor has concluded an unmodified (i.e., "clean") opinion is appropriate based on the
audit evidence obtained.
The relevant ethical requirements that apply to the audit comprise the Code of Ethics issued
by ICAI together with the other relevant ethical requirements relating to the audit and the
auditor refers to both.
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty
does not exist related to events or conditions that may cast significant doubt on the entity's
ability to continue as a going concern in accordance with SA 570 (Revised).
Key audit matters have been communicated in accordance with SA 701.
The auditor has obtained all of the other information prior to the date of the auditor's report
and has concluded that a material misstatement of the other information exists
Those responsible for oversight of the financial statements differ from those responsible for
the preparation of the financial statements.
In addition to the audit of the financial statements, the auditor has other reporting
responsibilities required under the Companies Act, 2013.
INDEPENDENT AUDITOR'S REPORT
To the Members of ABC Company Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of ABC Company Limited ("the
Company"), which comprise the balance sheet as at 31st March 20XX, and the statement of
profit and loss, (statement of changes in equity)45 and statement of cash flows for the year then
45
Where applicable.
33
ended, and notes to the financial statements, including a summary of significant accounting
policies and other explanatory information [in which are included the returns for the year ended
on that date audited by the branch auditors of the Company's branches located at (location of
branches)]46.
In our opinion and to the best of our information and according to the explanations given to us,
the aforesaid standalone financial statements give the information required by the Act in the
manner so required and give a true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as at March 31, 20XX, and
profit/loss, (changes in equity)47 and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under
section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are
further described in the Auditor's Responsibilities for the Audit of the Financial Statements
section of our report. We are independent of the Company in accordance with the Code of
Ethics issued by the Institute of Chartered Accountants of India together with the ethical
requirements that are relevant to our audit of the financial statements under the provisions of
the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the Code of Ethics. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Other Information [or another title if appropriate, such as "Information Other than the
Financial Statements and Auditor's Report Thereon"]
The Company's Board of Directors is responsible for the other information. The other
information comprises the [information included in the X report48, but does not include the
financial statements and our auditor's report thereon.]
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. As described below, we have
concluded that such a material misstatement of the other information exists.
[Description of material misstatement of the other information]
Key Audit Matters49
46
Where applicable.
47
Where applicable
48
A more specific description of the other information, such as "the management report and chairman's statement," may be used to
identify the other information.
49
The Key Audit Matters section is required for listed entities only.
34
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
[Description of each key audit matter in accordance with SA 701.]
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
[Reporting in accordance with SA 700 (Revised) see Illustration 1 in SA 700 (Revised).]
Auditor's Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with SA 700 (Revised) see Illustration 1 in SA 700 (Revised).]
Other Matter50
We did not audit the financial statements/information of ________(number) branches included
in the standalone financial statements of the Company whose financial statements / financial
information reflect total assets of Rs.______ as at 31st March, 20XX and total revenues of
Rs._______ for the year ended on that date, as considered in the standalone financial
statements. The financial statements/information of these branches have been audited by the
branch auditors whose reports have been furnished to us, and our opinion in so far as it relates
to the amounts and disclosures included in respect of these branches, is based solely on the
report of such branch auditors.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with SA 700 (Revised) see Illustration 1 in SA 700 (Revised).]
50
Where applicable.
35
Illustration 6 An auditor's report of a company, whether listed or unlisted, containing a
qualified opinion when the auditor has obtained all of the other information prior to the
date of the auditor's report and there is a limitation of scope with respect to a material
item in the consolidated financial statements which also affects the other information.
For purposes of this illustrative auditor's report, the following circumstances are assumed:
Audit of a complete set of consolidated financial statements of a company, whether listed or
unlisted (registered under the Companies Act, 2013) using a fair presentation framework.
The audit is a group audit (i.e., SA 600 applies).
The consolidated financial statements are prepared by management of the company in
accordance with the Accounting Standards prescribed under Section 133 of the Companies
Act, 2013.
The terms of the audit engagement reflect the description of management's responsibility for
the consolidated financial statements in SA 210.
The auditor was unable to obtain sufficient appropriate audit evidence regarding an
investment in a foreign associate. The possible effects of the inability to obtain sufficient
appropriate audit evidence are deemed to be material but not pervasive to the consolidated
financial statements (i.e., a qualified opinion is appropriate).
The relevant ethical requirements that apply to the audit are the Code of Ethics issued by
ICAI and the relevant provisions of the Companies Act, 2013.
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty
does not exist related to events or conditions that may cast significant doubt on the entity's
ability to continue as a going concern in accordance with SA 570 (Revised).
Key audit matters have been communicated in accordance with SA 701.
The auditor has obtained all of the other information prior to the date of the auditor's report
and the matter giving rise to the qualified opinion on the consolidated financial statements
also affects the other information.
Those responsible for oversight of the consolidated financial statements differ from those
responsible for the preparation of the consolidated financial statements.
In addition to the audit of the consolidated financial statements, the auditor has other
reporting responsibilities required under the Companies Act, 2013.
INDEPENDENT AUDITOR'S REPORT
To the Members of ABC Company Limited
Report on the Audit of the Consolidated Financial Statements
Qualified Opinion
We have audited the accompanying consolidated financial statements of ABC Company
Limited (hereinafter referred to as the "Holding Company") and its subsidiaries (the Holding
Company and its subsidiaries together referred to as "the Group"), its associates and jointly
controlled entities, which comprise the consolidated balance sheet as at March 31, 20XX, and
36
the consolidated statement of profit and loss, (consolidated statement of changes in equity)51
and consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies
(hereinafter referred to as "the consolidated financial statements").
In our opinion and to the best of our information and according to the explanations given to
us, except for the possible effects of the matter described in the Basis for Qualified Opinion
section of our report, the aforesaid consolidated financial statements give a true and fair view
in conformity with the accounting principles generally accepted in India, of their consolidated
state of affairs as at March 31, 2XXX, consolidated profit/loss, (consolidated changes in
equity)52, consolidated cash flows for the year then ended.
Basis for Qualified Opinion
The Group's investment in XYZ Company, a foreign associate acquired during the year and
accounted for by the equity method, is carried at Rs. XXX on the consolidated balance sheet
as at March 31, 20XX, and ABC's share of XYZ's net income of XXX is included in ABC's
income for the year then ended. We were unable to obtain sufficient appropriate audit evidence
about the carrying amount of ABC's investment in XYZ as at March 31, 2XXX and ABC's share
of XYZ's net income for the year because we were denied access to the financial information,
management, and the auditors of XYZ. Consequently, we were unable to determine whether
any adjustments to these amounts were necessary.
We conducted our audit in accordance with Standards on Auditing (SAs) prescribed under
section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are
further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Group and its associates and joint
ventures in accordance with the ethical requirements that are relevant to our audit of the
consolidated financial statements in India in terms of the Code of Ethics issued by the Institute
of Chartered Accountants of India and the relevant provisions of the Companies Act, 2013, and
we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our qualified opinion.
Other Information [or another title if appropriate, such as "Information Other than the
Financial Statements and Auditor's Report Thereon"]
The company's Board of Directors is responsible for the other information. The other information
comprises the [information included in the X report53, but does not include the consolidated
financial statements and our auditor's report thereon.]
Our opinion on the consolidated financial statements does not cover the other information and
we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit or
51
Where applicable.
52
Where applicable.
53
A more specific description of the other information, such as "the management report and chairman's statement," may be used t o
identify the other information.
37
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. As described in the Basis for Qualified
Opinion section above, we were unable to obtain sufficient appropriate evidence about the
carrying amount of ABC's investment in XYZ as at March 31, 20XX and ABC's share of XYZ's
net income for the year. Accordingly, we are unable to conclude whether or not the other
information is materially misstated with respect to this matter.
Key Audit Matters54
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the consolidated financial statements of the current period. These
matters were addressed in the context of our audit of the consolidated financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. In addition to the matter described in the Basis for Qualified Opinion section, we have
determined the matters described below to be the key audit matters to be communicated in our
report.
[Description of each key audit matter in accordance with SA 701.]
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
[Reporting in accordance with SA 700 (Revised) see Illustration 2 in SA 700 (Revised).]
Auditor's Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with SA 700 (Revised) see Illustration 2 in SA 700 (Revised).]
Other Matters
(a) We did not audit the financial statements / financial information of ______ subsidiaries, and
______ jointly controlled entities, whose financial statements / financial information reflect
total assets of Rs.______ as at 31st March, 20XX, total revenues of Rs._______ and net
cash flows amounting to Rs.______ for the year ended on that date, as considered in the
consolidated financial statements. The consolidated financial statements also include the
Group's share of net profit/loss of Rs. _____ for the year ended 31st March, 20XX, as
considered in the consolidated financial statements, in respect of ____associates, whose
financial statements / financial information have not been audited by us. These financial
statements / financial information have been audited by other auditors whose reports have
been furnished to us by the management and our opinion on the consolidated financial
statements, in so far as it relates to the amounts and disclosures included in respect of
these subsidiaries, jointly controlled entities and associates, and our report in terms of sub-
sections (3) and (11) of Section 143 of the Act, in so far as it relates to the aforesaid
subsidiaries, jointly controlled entities and associates, is based solely on the reports of the
other auditors.
54
The Key Audit Matters section is required for listed entities only.
38
(b) We did not audit the financial statements / financial information of ______ subsidiaries and
______ jointly controlled entities, whose financial statements / financial information reflect
total assets of Rs.______ as at 31st March, 20XX, total revenues of Rs._______ and net
cash flows amounting to Rs.______ for the year ended on that date, as considered in the
consolidated financial statements. The consolidated financial statements also include the
Group's share of net profit/loss of Rs. _____ for the year ended 31st March, 20XX, as
considered in the consolidated financial statements, in respect of ____associates, whose
financial statements / financial information have not been audited by us. These financial
statements / financial information are unaudited and have been furnished to us by the
management and our opinion on the consolidated financial statements, in so far as it relates
to the amounts and disclosures included in respect of these subsidiaries, jointly controlled
entities and associates, and our report in terms of sub-sections (3) and (11) of Section 143
of the Act in so far as it relates to the aforesaid subsidiaries, jointly controlled entities and
associates, is based solely on such unaudited financial statements / financial information. In
our opinion and according to the information and explanations given to us by the
management, these financial statements / financial information are not material to the
Group.
Our opinion on the consolidated financial statements, and our report on Other Legal and
Regulatory Requirements below, is not modified in respect of the above matters with respect to
our reliance on the work done and the reports of the other auditors and the financial statements
/ financial information certified by the management.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with SA 700 (Revised) see Illustration 2 in SA 700 (Revised).]
39
Illustration 7 An auditor's report of a company, whether listed or unlisted, containing an
adverse opinion when the auditor has obtained all of the other information prior to the
date of the auditor's report and the adverse opinion on the consolidated financial
statements also affects the other information.
For purposes of this illustrative auditor's report, the following circumstances are assumed:
Audit of a complete set of consolidated financial statements of a company, whether listed
or unlisted (registered under the Companies Act, 2013) using a fair presentation
framework. The audit is a group audit (i.e., SA 600 applies).
The consolidated financial statements are prepared by management of the company in
accordance with the Accounting Standards prescribed under Section 133 of the
Companies Act, 2013.
The terms of the audit engagement reflect the description of management's responsibility
for the consolidated financial statements in SA 210.
The consolidated financial statements are materially misstated due to the non-
consolidation of a subsidiary. The material misstatement is deemed to be pervasive to the
consolidated financial statements. The effects of the misstatement on the consolidated
financial statements have not been determined because it was not practicable to do so
(i.e., an adverse opinion is appropriate).
The relevant ethical requirements that apply to the audit are the Code of Ethics issued by
ICAI and the provisions of the Companies Act, 2013.
Based on the audit evidence obtained, the auditor has concluded that a material
uncertainty does not exist related to events or conditions that may cast significant doubt on
the entity's ability to continue as a going concern in accordance with SA 570 (Revised).
Key audit matters have been communicated in accordance with SA 701.
The auditor has obtained all of the other information prior to the date of the auditor's report
and the matter giving rise to the adverse opinion on the consolidated financial statements
also affects the other information.
Those responsible for oversight of the consolidated financial statements differ from those
responsible for the preparation of the consolidated financial statements.
In addition to the audit of the financial statements, the auditor has other reporting
responsibilities required under the Companies Act, 2013.
INDEPENDENT AUDITOR'S REPORT
To the Members of ABC Company Limited
Report on the Audit of the Consolidated Financial Statements
Adverse Opinion
We have audited the accompanying consolidated financial statements of ABC Company
Limited (hereinafter referred to as the "Holding Company") and its subsidiaries (the Holding
40
Company and its subsidiaries together referred to as "the Group"), its associate s and jointly
controlled entities, which comprise the consolidated balance sheet as at March 31, 2XXX,
the consolidated statement of profit and loss, (consolidated statement of changes in equity)55
and the consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies
(hereinafter referred to as the "consolidated financial statements").
In our opinion and to the best of our information and according to the explanations given to
us, because of the significance of the matter discussed in the Basis for Adverse Opinion
section of our report, the accompanying consolidated financial statements do not give a true
and fair view in conformity with the accounting principles generally accepted in India, of the
consolidated state of affairs of the Group, its associates and jointly controlled entities, as at
March 31, 20XX, of its consolidated profit/loss, (consolidated position of changes in equity)56
and the consolidated cash flows for the year then ended.
Basis for Adverse Opinion
As explained in Note X, the Group has not consolidated subsidiary XYZ Company that the
Group acquired during 20XX because it has not yet been able to determine the fair values of
certain of the subsidiary's material assets and liabilities at the acquisition date. This investment
is therefore accounted for on a cost basis. Under the accounting principles generally accepted
in India, the Group should have consolidated this subsidiary and accounted for the acquisition
based on provisional amounts. Had XYZ Company been consolidated, many elements in the
accompanying consolidated financial statements would have been materially affected. The
effects on the consolidated financial statements of the failure to consolidate have not been
determined.
We conducted our audit in accordance with Standards on Auditing (SAs) prescribed under
section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are
further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Group and its associates and joint
ventures in accordance with the ethical requirements that are relevant to our audit of the
consolidated financial statements in India in terms of the Code of Ethics issued by the Institute
of Chartered Accountants of India and the relevant provisions of the Companies Act, 2013, and
we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our qualified opinion.
Other Information [or another title if appropriate, such as "Information Other than the
Financial Statements and Auditor's Report Thereon"]
The company's Board of Directors is responsible for the other information. The other information
comprises the [information included in the X report57, but does not include the consolidated
financial statements and our auditor's report thereon.]
Our opinion on the consolidated financial statements does not cover the other information and
we do not express any form of assurance conclusion thereon.
55
Where applicable.
56
Where applicable.
57
A more specific description of the other information, such as "the management report and chairman's statement," may be used t o
identify the other information.
41
In connection with our audit of the consolidated financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to
report that fact. As described in the Basis for Adverse Opinion section above, the Group should
have consolidated XYZ Company and accounted for the acquisition based on provisional
amounts. We have concluded that the other information is materially misstated for the same
reason with respect to the amounts or other items in the X report affected by the failure to
consolidate XYZ Company.
Key Audit Matters58
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the consolidated financial statements of the current period. These
matters were addressed in the context of our audit of the consolidated financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. In addition to the matter described in the Basis for Adverse Opinion section we have
determined the matters described below to be the key audit matters to be communicated in our
report.
[Description of each key audit matter in accordance with SA 701.]]
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
[Reporting in accordance with SA 700 (Revised) see Illustration 2 in SA 700 (Revised).]
Auditor's Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with SA 700 (Revised) see Illustration 2 in SA 700 (Revised).]
Other Matters
(a) We did not audit the financial statements / financial information of ______ subsidiaries, and
______ jointly controlled entities, whose financial statements / financial information reflect
total assets of Rs.______ as at 31st March, 20XX, total revenues of Rs._______ and net
cash flows amounting to Rs.______ for the year ended on that date, as considered in the
consolidated financial statements. The consolidated financial statements also include the
Group's share of net profit/loss of Rs. _____ for the year ended 31st March, 20XX, as
considered in the consolidated financial statements, in respect of ____associates, whose
financial statements / financial information have not been audited by us. These financial
statements / financial information have been audited by other auditors whose reports have
been furnished to us by the management and our opinion on the consolidated financial
statements, in so far as it relates to the amounts and disclosures included in respect of
these subsidiaries, jointly controlled entities and associates, and our report in terms of sub-
sections (3) and (11) of Section 143 of the Act, in so far as it relates to the aforesaid
58
The Key Audit Matters section is required for listed entities only.
42
subsidiaries, jointly controlled entities and associates, is based solely on the reports of the
other auditors.
(b) We did not audit the financial statements / financial information of ______ subsidiaries and
______ jointly controlled entities, whose financial statements / financial information reflect
total assets of Rs.______ as at 31st March, 20XX, total revenues of Rs._______ and net
cash flows amounting to Rs.______ for the year ended on that date, as considered in the
consolidated financial statements. The consolidated financial statements also include the
Group's share of net profit/loss of Rs. _____ for the year ended 31st March, 20XX, as
considered in the consolidated financial statements, in respect of ____associates, whose
financial statements / financial information have not been audited by us. These financial
statements / financial information are unaudited and have been furnished to us by the
management and our opinion on the consolidated financial statements, in so far as it relates
to the amounts and disclosures included in respect of these subsidiaries, jointly controlled
entities and associates, and our report in terms of sub-sections (3) and (11) of Section 143
of the Act in so far as it relates to the aforesaid subsidiaries, jointly controlled entities and
associates, is based solely on such unaudited financial statements/financial information. In
our opinion and according to the information and explanations given to us by the
Management, these financial statements / financial information are not material to the
Group.
Our opinion on the consolidated financial statements, and our report on Other Legal and
Regulatory Requirements below, is not modified in respect of the above matters with respect
to our reliance on the work done and the reports of the other auditors and the financial
statements / financial information certified by the Management.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with SA 700 (Revised) see Illustration 2 in SA 700 (Revised).]
43
CONFORMING AMENDMENTS TO OTHER SAs
Note: The following are conforming amendments to other SAs as a result of the
issuance of Proposed SA 720 (Revised). The footnote numbers within these amendments do
not align with the SAs that are amended, and reference should be made to those SAs.
SA 210, Agreeing the Terms of Audit Engagements
Application and Other Explanatory Material
Additional Information (Ref: Para. 6(b)(iii)(b))
A18a. Additional information that the auditor may request from management for the purpose of
the audit may include when applicable, matters related to other information in
accordance with SA 720 (Revised). When the auditor expects to obtain other information after
the date of the auditor's report, the terms of the audit engagement may also acknowledge
the auditor's responsibilities relating to such other information including, if applicable, the
actions that may be appropriate or necessary if the auditor concludes that a material
misstatement of the other information exists in other information obtained after the date of
the auditor's report.*
Appendix 1
Examples of an Audit Engagement Letter
[Reporting]
[Insert appropriate reference to the expected form and content of the auditor's report including, if
applicable, the reporting on other information in accordance with SA 720 (Revised).]
The form and content of our report may need to be amended in the light of our audit findings.
SA 260 (Revised), Communication with Those Charged with
Governance
Application and Other Explanatory Material
Planned Scope and Timing of the Audit (Ref: Para. 15)
...
A14. Other planning matters that it may be appropriate to discuss with those charged with
governance include:
Where the entity has an internal audit function, how the external auditor and internal
auditors can work together in a constructive and complementary manner, including any
planned use of the work of the internal audit function, and the nature and extent of any
planned use of internal auditors to provide direct assistance.59
*
When the conforming amendment becomes effective, this paragraph will become paragraph A19 and all subsequent paragraphs
will be renumbered accordingly.
59
SA 610 (Revised), Using the Work of Internal Auditors, paragraph 31.
44
The views of those charged with governance of:
o The appropriate person(s) in the entity's governance structure with whom to
communicate.
o The allocation of responsibilities between those charged with governance and
management.
o The entity's objectives and strategies, and the related business risks that
may result in material misstatements.
o Matters those charged with governance consider warrant particular attention
during the audit, and any areas where they request additional procedures to be
undertaken.
o Significant communications with regulators.
o Other matters those charged with governance consider may influence the
audit of the financial statements.
The attitudes, awareness, and actions of those charged with governance concerning (a) the
entity's internal control and its importance in the entity, including how t hose charged
with governance oversee the effectiveness of internal control, and (b) the detection or
possibility of fraud.
The actions of those charged with governance in response to developments in accounting
standards, corporate governance practices, exchange listing rules, and related matters.
The responses of those charged with governance to previous communications with the
auditor.
The documents comprising the other information (as defined in SA 720 (Revised))
and the planned manner and timing of the issuance of such documents. When the auditor
expects to obtain other information after the date of the auditor's report, the
discussions with those charged with governance may also include the actions that may be
appropriate or necessary if the auditor concludes that a material misstatement of the other
information exists in other information obtained after the date of the auditor's report.
Significant Findings from the Audit (Ref: Para. 16)
...
Circumstances that Affect the Form and Content of the Auditor's Report (Ref: Para 16(d))
...
A24. Circumstances in which the auditor is required or may otherwise consider it necessary to
include additional information in the auditor's report in accordance with the SAs, and for which
communication with those charged with governance is required, include when:
The auditor expects to modify the opinion in the auditor's report in accordance with SA
705(Revised).60
A material uncertainty related to going concern is reported in accordance with SA
60
SA 705 (Revised), Modifications to the Opinion in the Independent Auditor's Report, paragraph 30.
45
570(Revised).61
Key audit matters are communicated in accordance with SA 701.62
The auditor considers it necessary to include an Emphasis of Matter paragraph or
63
Other Matters paragraph in accordance with SA 706 (Revised) or is required to do so by
other SAs.
The auditor has concluded that there is an uncorrected material misstatement of the
other information in accordance with SA 720 (Revised).64
In such circumstances, the auditor may consider it useful to provide those charged with
governance with a draft of the auditor's report to facilitate a discussion of how such matters will
be addressed in the auditor's report.
...
Other Significant Matters Relevant to the Financial Reporting Process (Ref: Para. 16(e))
...
A27. Other significant matters arising from during the audit that are directly relevant to those
charged with governance in overseeing the financial reporting process may include such
matters as material misstatements of fact or material inconsistencies in information
accompanying the audited financial statements the other information that have been corrected.
Appendix 1
(Ref: Para. 3)
Specific Requirements in SQC 1 and Other SAs that Refer to Communications with Those
Charged With Governance
65
This appendix identifies paragraphs in SQC 1 and other SAs that require communication of
specific matters with those charged with governance. The list is not a substitute for considering
the requirements and related application and other explanatory material in SAs.
SA 720 (Revised), "The Auditor's Responsibilities Relating to Other Information" paragraph
1719.
SA 450, Evaluation of Misstatements Identified during the Audit
Application and Other Explanatory Material
Evaluating the Effect of Uncorrected Misstatements (Ref: Para. 1011)
A16. The circumstances related to some misstatements may cause the auditor to
evaluate them as material, individually or when considered together with other misstatements
accumulated during the audit, even if they are lower than materiality for the financial statements
61
SA 570 (Revised), `Going Concern', paragraph 25(d).
62
SA 701, paragraph 17.
63
SA 706 (Revised), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report, paragraph 12.
64
SA 720 (Revised), `The Auditor's Responsibilities Relating to Other Information', paragraph 18(a).
65
SQC 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and
Related Services Engagements.
46
as a whole. Circumstances that may affect the evaluation include the extent to which the
misstatement:
...
Affects other information that will be communicated to be included in the entity's annual
report documents containing the audited financial statements (for example, information to be
included in a "Management Discussion and Analysis" or an "Operating and Financial
Review") that may reasonably be expected to influence the economic decisions of the
66
users of the financial statements. SA 720(Revised) deals with the auditor's
responsibilities relating to consideration of other information, on which the auditor has
no obligation to report, in documents containing audited financial statements.
SA 500, Audit Evidence
Definitions
5. For purposes of the SAs, the following terms have the meanings attributed below:
(c) Audit evidence Information used by the auditor in arriving at the conclusions on which
the auditor's opinion is based. Audit evidence includes both information contained in the
accounting records underlying the financial statements and other information obtained
from other sources.
SA 510, Initial Audit Engagements--Opening Balances
Note: The Illustrations of Auditor's Report given in the Appendix will require
consequential amendments due to issuance of Proposed SA 720(Revised).
SA 560, Subsequent Events
Introduction
Scope of this SA
1. This Standard on Auditing (SA) deals with the auditor's responsibilities relating to
subsequent events in an audit of financial statements. It does not deal with matters relating
to the auditor's responsibilities for other information obtained after the date of the auditor's
report, which are addressed in SA 720(Revised).67 However, such other information may bring
to light a subsequent event that is within the scope of this SA. (Ref: Para. A1)
Application and Other Explanatory Material
Scope of this SA (Ref: Para. 1)
A1. When the audited financial statements are included in other documents subsequent to
the issuance of the financial statements (other than annual reports that would be within the
scope of SA 720(Revised)), the auditor may have additional responsibilities relating to
66
SA 720 (Revised), The Auditor's Responsibilities In Relation Relating to Other Information in Documents Containing Audited
Financial Statements.
67
SA 720 (Revised), The Auditor's Responsibilities Relating to Other Information.
47
subsequent events that the auditor may need to consider, such as legal or regulatory
requirements involving the offering of securities to the public in jurisdictions in which the
securities are being offered. For example, the auditor may be required to perform additional
audit procedures to the date of the final offering document. These procedures may include
those referred to in paragraphs 6 and 7 performed up to a date at or near the effective date of
the final offering document, and reading the offering document to assess whether the other
information in the offering document is consistent with the financial information with which
the auditor is associated.
Facts Which Become Known to the Auditor after the Date of the Auditor's Report but
before the Date the Financial Statements Are Issued
Implications of Other Information Obtained after the Date of the Auditor's Report (Ref: Para. 10)
A10a. While the auditor has no obligation to perform any audit procedures regarding the
financial statements after the date of the auditor's report but before the date the financial
statements are issued, SA 720(Revised) contains requirements and guidance with respect to
other information obtained after the date of the auditor's report, which might include other
information obtained after the date of the auditor's report, but before the date the financial
statements are issued.*
...
Facts Which Become Known to the Auditor after the Financial Statements Have Been
Issued
Implications of Other Information Received after the Financial Statements Have Been Issued
(Ref: Para. 14)
A16a. The auditor's obligations regarding other information received after the date of the
auditor's report are addressed in SA 720(Revised). While the auditor has no obligation to
perform any audit procedures regarding the financial statements after the financial statements
have been issued, SA 720(Revised) contains requirements and guidance with respect to other
information obtained after the date of the auditor's report.*
SA 570 (Revised), Going Concern
Note: The Illustrations of Auditor's Report given in the Appendix will require
consequential amendments due to issuance of Proposed SA 720(Revised).
SA 700(Revised), Forming an Opinion and Reporting on Financial
Statements
Requirements
Auditor's Report for Audits Conducted in Accordance with Standards on Auditing
*
When the conforming amendment becomes effective, this paragraph will become paragraph A11 and all subsequent paragraphs will
be renumbered accordingly.
*
When the conforming amendment becomes effective, this paragraph will become paragraph A17 and all subsequent paragraphs will
be renumbered accordingly.
48
...
Other Information
32. Where applicable, the auditor shall report in accordance with SA 720(Revised).
Responsibilities for the Financial Statements
3233. The auditor's report shall include a section with a heading "Responsibilities of
Management for the Financial Statements." The auditor's report shall use the term that is
appropriate in the context of the legal framework in the particular jurisdiction and need not refer
specifically to "management". In some jurisdictions, the appropriate reference may be to those
charged with governance. (Ref: Para. A39)*
...
Auditor's Report Prescribed by Law or Regulation
4849. If the auditor is required by law or regulation applicable to the entity to use a
specific layout, or wording of the auditor's report, the auditor's report shall refer to Standards on
Auditing only if the auditor's report includes, at a minimum, each of the following elements: (Ref:
Para. A62A63)
(a) A title.
(b) An addressee, as required by the circumstances of the engagement.
(c) An Opinion section containing an expression of opinion on the financial
statements and a reference to the applicable financial reporting framework used to
prepare the financial statements(see paragraph 27).
(d) An identification of the entity's financial statements that have been audited.
(e) A statement that the auditor is independent of the entity in accordance with the relevant
ethical requirements relating to the audit, and has fulfilled the auditor's other ethical
responsibilities in accordance with these requirements. The statement shall refer to the
Code of Ethics issued by ICAI.
(f) Where applicable, a section that addresses, and is not inconsistent with, the
reporting requirements in paragraph 22 of SA 570 (Revised).
(g) Where applicable, a Basis for Qualified (or Adverse) Opinion section that addresses, and
is not inconsistent with, the reporting requirements in paragraph 23 of SA 570 (Revised).
(h) Where applicable, a section that includes the information required by SA 701, or
additional information about the audit that is prescribed by law or regulation and that
68
addresses, and is not inconsistent with, the reporting requirements in that SA. (Ref:
Para. A63A64)
*
When the conforming amendment becomes effective, this paragraph will become paragraph 33 and all subsequent paragraphs will
be renumbered accordingly.
68
SA 701, paragraphs 11-16
49
(i) Where applicable, a section that addresses the reporting requirements in paragraph 24
of SA 720 (Revised).69
(j) A description of management's responsibilities for the preparation of the financial
statements and an identification of those responsible for the oversight of the financial
reporting process that addresses, and is not inconsistent with, the requirements in
paragraphs 3235.
(k) A reference to Standards on Auditing and the law or regulation, and a description of the
auditor's responsibilities for an audit of the financial statements that addresses, and is
not inconsistent with, the requirements in paragraphs 3639. (Ref: Paras. A49A50)
(l) The auditor's signature.
(m) The place of signature.
(n) The date of the auditor's report.
Application and Other Explanatory Material
Supplementary Information Presented with the Financial Statements (Ref: Para. 5152)
...
A76. The fact that supplementary information is unaudited does not relieve the
auditor of the responsibilities described in SA 720(Revised).
Note: The Illustrations of Auditor's Report given in the Appendix will also require
consequential amendments due to issuance of Proposed SA 720(Revised).
SA 701, Communicating Key Audit Matters in the Independent
Auditor's Report
Application and Other Explanatory Material
Communicating Key Audit Matters
...
Descriptions of Individual Key Audit Matters (Ref: Para. 13)
...
A38. SA 720(Revised) defines the term annual report and explains that documents such
as a management report, management commentary, or operating and financial review or
similar reports by those charged with governance (e.g., a directors ' report); a Chairman's
statement; corporate governance statement; or internal control and risk assessment reports
70
may form part of the annual report. SA 720(Revised) addresses the auditor's responsibilities
69
SA 720 (Revised), paragraph 24
70
SA 720 (Revised), The Auditor's Responsibilities Relating to Other Information, paragraphs 12(a) and A1A3.
107 SA 720, The Auditor's Responsibilities in Relation to Other Information in Documents Containing Audited Financial Statements.
50
relating to other information included in the annual report. Although the auditor's opinion
on the financial statements does not cover extend to the other information addressed by
SA 720,107 the auditor may consider this information, as well as other publicly available
communications by the entity or other credible sources, in formulating the description of a key
audit matter.
SA 705(Revised), Modifications to the Opinion in the Independent
Auditor's Report
Requirements
Considerations When the Auditor Disclaims an Opinion on the Financial Statements
29. Unless required by law or regulation, when the auditor disclaims an opinion on
the financial statements, the auditor's report shall not include a Key Audit Matters section in
accordance with SA 70171 or an Other Information section in accordance with SA 720
72
(Revised). (Ref: Para. A26)
...
Application and Other Explanatory Material
Considerations When the Auditor Disclaims an Opinion on the Financial Statements (Ref: Para.
29)
A26. Providing the reasons for the auditor's inability to obtain sufficient appropriate audit
evidence within the Basis for Disclaimer of Opinion section of the auditor's report provides
useful information to users in understanding why the auditor has disclaimed an opinion on the
financial statements and may further guard against inappropriate reliance on them. However,
communication of any key audit matters other than the matter(s) giving rise to the disclaimer
of opinion may suggest that the financial statements as a whole are more credible in relation to
those matters than would be appropriate in the circumstances, and would be inconsistent with
the disclaimer of opinion on the financial statements as a whole. Similarly, it would not be
appropriate to include an Other Information section in accordance with SA 720(Revised)
addressing the auditor's consideration of the consistency of the other information with the
financial statements. Accordingly, paragraph 29 of this SA prohibits a Key Audit Matters section
or an Other Information section from being included in the auditor's report when the auditor
disclaims an opinion on the financial statements, unless the auditor is otherwise required by law
or regulation to communicate key audit matters or to report on other information.
Note: The Illustrations of Auditor's Report given in the Appendix will also require
consequential amendments due to issuance of Proposed SA 720(Revised).
SA 706 (Revised), Emphasis of Matter Paragraphs and Other Matter
Paragraphs in the Independent Auditor's Report
Introduction
71
SA 701, Communicating Key Audit Matters in the Independent Auditor's Report, paragraphs 1113.
72
SA 720 (Revised), The Auditor's Responsibilities Relating to Other Information, paragraph A58.
51
Scope of this SA
...
74
3. SA 570(Revised)73 and SA 720(Revised) establishes requirements and provides
guidance about communication in the auditor's report relating to going concern and other
information, respectively.
Note: The Illustrations of Auditor's Report given in the Appendix will also require
consequential amendments due to issuance of Proposed SA 720(Revised).
SA 710, Comparative Information--Corresponding Figures and
Comparative Financial Statements
Note: The Illustrations of Auditor's Report given in the Appendix will require
consequential amendments due to issuance of Proposed SA 720(Revised).
SA 810, Engagements to Report on Summary Financial Statements
Requirements
Other Information in Documents Containing Summary Financial Statements
24. The auditor shall read the other information included in a document containing the
summary financial statements and related auditor's report to consider whether there is identify
a material inconsistencyies between the other information and, if any, with the summary
financial statements. If, on reading the other information, the auditor identifies a material
inconsistency, the auditor shall determine whether the summary financial statements or the
other information needs to be revised. If, on reading the other information, the auditor becomes
aware of an apparent material misstatement of fact that the other information needs to be
revised, the auditor shall discuss the matter with management. (Ref: Para. A19)
Application and Other Explanatory Material
A19. SA 720(Revised)75 contains requirements and guidance relating regarding the auditor's
responsibilities relating to reading other information in a financial statement audit engagement
included in a document containing the audited financial statements and related auditor's report,
and responding to material inconsistencies and material misstatements of fact. Adapted as
necessary in the circumstances, they may be helpful in applying the requirement in paragraph
24.
73
SA 570 (Revised), Going Concern.
74
SA 720 (Revised), The Auditor's Responsibilities Relating to Other Information.
75
SA 720 (Revised), The Auditor's Responsibilities In Relation Relating to Other Information in Documents Containing Audited
Financial Statements.
52
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