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ASA 720 - Other Information in Documents Containing Audited Financial Reports - April 2006
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18 While reading the other information for the purpose of identifying material inconsistencies, the auditor may become aware of an apparent material misstatement of fact.
19 For the purpose of this Auditing Standard, a “material misstatement of fact” in other information exists when such information, not related to matters appearing in the audited financial report, is incorrectly stated or presented.
20 If the auditor becomes aware that the other information appears to include a material misstatement of fact, the auditor shall discuss the matter with the entity’s management and those charged with governance.
21 When discussing the matter with the entity’s management and those charged with governance, the auditor may not be able to evaluate the validity of the other information and management’s responses to the auditor’s enquiries, and would ordinarily need to consider whether valid differences of judgement or opinion exist.
22 When the auditor still considers that there is an apparent material misstatement of fact, the auditor shall request management to consult with an expert, such as the entity’s lawyers, and shall consider the advice received.
23 If the auditor concludes that there is a material misstatement of fact in the other information which management and those charged with governance refuse to correct, the auditor shall consider taking further appropriate action.
24 Ordinarily, the actions taken could include such steps as notifying those charged with governance in writing of the auditor's concern regarding the other information and obtaining legal advice.