Page 195 - CA Final PARAM Digital Book.

o Descriptions of trends in market prices of key commodities or raw
materials.
o Contrasts of supply, demand and regulatory circumstances between
geographic regions.
o Explanations of specific factors influencing the entity’s profitability in
specific segments.
Author’s Note

• Above is the list of Examples of “Amounts” or “other items” included in the “other
information. Students are advised to write the number of points on the basis of marks for
which question is asked .

QNO Material Misstatement in other information Old Course – (N20M)
127.200 TITANIUM CNO—SA720.100
ING Associates, Chartered Accountants, conducting the audit of XYZ Ltd., a listed Company for the year
ended 31st March 2020 is concerned with the auditor's responsibilities relating to misstatements in other
information, both financial and non-financial, included in the Company’s annual report. While reading
other information, ING Associates considers whether there is any material misstatement of the other
information in the Company. After performing their procedures, the auditor concludes that a
material misstatement of the other information exists.

ING Associates discussed with the Management about the other information that appeared to be
materially misstated to the auditor and also requested management to provide evidence for the basis of
management’s statements in the other information along with supporting documents.

Guide ING Associates as to how to respond to that material misstatement of other information obtained
prior to the date of auditor’s report. Will your answer be different in case ING Associates conclude
the same after the date of auditor’s report?
➢ Responding When the Auditor Concludes That a Material Misstatement of the Other Information
Exists:
• As per SA 720, “The Auditor’s Responsibility in Relation to Other Information”, if the auditor
concludes that a material misstatement of the other information exists, the auditor shall request
management to correct the other information. If management:
• Agrees to make the correction, the auditor shall determine that the correction has been
made; or
• Refuses to make the correction, the auditor shall communicate the matter with those
charged with governance and request that the correction be made.

• If the auditor concludes that a material misstatement exists in other information obtained prior
to the date of the auditor’s report, and the other information is not corrected after
communicating with those charged with governance, the auditor shall take appropriate action,
including:
• Considering the implications for the auditor’s report and communicating with those
charged with governance about how the auditor plans to address the material
misstatement in the auditor’s report.
• Withdrawing from the engagement, where withdrawal is possible under applicable law or
regulation.

• If the auditor concludes that a material misstatement exists in other information obtained after
the date of the auditor’s report, the auditor shall:
• If the other information is corrected, perform the procedures necessary in the
circumstances; or
• If the other information is not corrected after communicating with those charged with
governance, take appropriate action considering the auditor’s legal rights and obligations,
to seek to have the uncorrected material misstatement appropriately brought to the
attention of users for whom the auditor’s report is prepared.

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