ICAI has released first edition (August 2019) of the Implementation Guide for Revised SA 720 on The Auditor’s Responsibilities Relating to Other Information, comprising of FAQs on key issues relating to SA 720 along with illustrative formats of auditors reports on other information, as under:
This Implementation Guide of ICAI provides supplementary guidance to Standard on Auditing (SA) 720 (Revised), The Auditor’s Responsibilities Relating to Other Information and has to be read together with SA 720 (Revised). In absence of any separate requirement, the auditor’s opinion does not cover ‘Other Information’ in documents containing audited financial statements and the auditor has no specific responsibility for determining whether or not other information is properly stated except where there exists a regulatory requirement to do so. However, in case there are material inconsistencies between the audited financial statements and the other information, the credibility of the financial statements would be undermined and thus, it may be considered necessary by the auditor to review the Other Information.
It may be noted that ICAI has issued SA 720 (Revised) in 2018, which applies to audits of financial statements for periods beginning on or after April 1, 2018. Revised SA 720 casts a new reporting requirement on the auditors of listed entities and corporate entities to include a separate section on “Other Information” in their audit reports. The Standard also contains several new requirements regarding auditors’ work effort on other information.
Accordingly, the Auditing and Assurance Standards Board (AASB) of ICAI has come out with an Implementation Guide on SA 720(Revised) to provide reasonable guidance to members so that they can discharge their responsibilities in an effective manner. This Implementation Guide is written in simple and easy to understand language. For ease of usage and understanding of the readers, the Implementation Guide has been written in a “Question – Answer” format containing FAQs on this Standard and their responses.