IntroductionIntroduction

Introduction

4 The purpose of this Auditing Standard is to establish mandatory requirements and provide explanatory guidance on the auditor’s consideration of other information, on which the auditor has no obligation to report, in documents containing audited financial reports. This Auditing Standard is to be used when an annual report is involved, however it may also be relevant to other documents containing audited financial reports.

5 The auditor shall read the other information to identify material inconsistencies with the audited financial report.

6 A “material inconsistency” exists when other information contradicts information contained in the audited financial report. A material inconsistency may raise doubt about the audit conclusions drawn from audit evidence previously obtained and, possibly, about the basis for the auditor’s opinion on the financial report.

7 An entity ordinarily issues on an annual basis a document which includes its audited financial report together with the auditor’s report thereon. This document is frequently referred to as the “annual report”. In issuing such a document, an entity may also include, either by law or custom, other financial and non-financial information. For the purpose of this Auditing Standard, such other financial and non-financial information is called “other information”.

8 Examples of other information include a report by management or those charged with governance on operations, financial summaries or highlights, employment data, planned capital expenditures, financial ratios, names of officers and directors and selected quarterly data.

9 In certain circumstances, the auditor has a statutory or contractual obligation to report specifically on other information. In other circumstances, the auditor has no such obligation. However, under paragraph 5 of this Auditing Standard, the auditor needs to give consideration to such other information when issuing an auditor’s report on the financial report, as the credibility of the audited financial report may be undermined by inconsistencies which may exist between the audited financial report and other information.

10 Some jurisdictions require the auditor to apply specific procedures to certain of the other information, for example, required supplementary data and interim financial information. If such other information is omitted or contains deficiencies, the auditor may be required to refer to the matter in the auditor’s report.

11 When there is an obligation to report specifically on other information, the auditor’s responsibilities are determined by the nature of the engagement and by local legislation and Auditing Standards. When such responsibilities involve the review of other information, the auditor ordinarily follows the mandatory requirements and explanatory guidance on review engagements in the appropriate Auditing Standard.