ASA 720 - Other Information in Documents Containing Audited Financial Reports - April 2006
Material InconsistenciesMaterial Inconsistencies
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Material Inconsistencies
14 If, on reading the other information, the auditor identifies a material inconsistency, the auditor shall determine whether the audited financial report or the other information needs to be amended.
15 If an amendment is necessary to the audited financial report and the entity refuses to make the amendment, the auditor shall express a qualified or adverse opinion.
16 If an amendment is necessary to the other information and the entity refuses to make the amendment, the auditor shall, in accordance with ASA 701 Modifications to the Auditor’s Report, include in the auditor’s report an emphasis of matter paragraph describing the material inconsistency.
17 The actions taken, such as not issuing the auditor’s report or withdrawing from the engagement, will depend upon the particular circumstances and the nature and significance of the inconsistency. Ordinarily, the auditor would also consider obtaining legal advice as to further action.