Proposal regarding other information in annual reports
FINANCIAL REPORTING INSIGHTS |
The Auditing Standards Board (ASB) has a strategic objective of converging its standards with those of the International Auditing and Assurance Standards Board. Accordingly, the ASB recently used International Standard on Auditing 720 (Revised), The Auditor’s Responsibilities Relating to Other Information, as the basis for a recent proposed Statement on Auditing Standards (SAS), The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports. If finalized, the proposed SAS will supersede AU-C section 720, Other Information in Documents Containing Audited Financial Statements, and will result in the following changes, among others, to that standard:
- Clarification of the documents that are within the scope of the standard by defining annual report
- The addition of a requirement for the auditor to determine, through discussion with management, and obtain management’s written acknowledgment regarding, which document or documents constitute the annual report
- Clarification and expansion of the auditor’s responsibilities with respect to other information
- The addition of a requirement that the auditor reference the other information in the auditor’s report on the financial statements
If finalized, the proposed SAS will be effective for audits of financial statements for periods ending on or after June 15, 2019. The proposed SAS is available for comment until May 15, 2018.