Page 149 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

(CNO - SA 720.080) Step 1: Obtaining the Other Information
Discuss Annual Report preparation: The auditor must engage in discussions with the management to ascertain
the document(s) that constitute the annual report, along with understanding the planned approach and timeline
for the release of such document(s).
Arrangements to Obtain the Report: The auditor is required to coordinate with the management to timely
receive, preferably before the date of the auditor's report, the final version of the document(s) that make up the
annual report.
Request for Written Representation: In cases where some or all of the document(s) identified in point (a) are
not accessible until after the date of the auditor's report, the auditor should ask the management to furnish a
written representation. This representation should confirm that the final version of the document(s) will be
shared with the auditor before the entity issues it, allowing the auditor to fulfil the procedures mandated by this
SA.
Step 2: Reading and Considering the Other Information
Considering Material Inconsistency with Financial Statements: The auditor is required to read the other
information and assess if there exists a material inconsistency between the other information and the financial
statements. This involves comparing selected amounts or other items in the other information, which are
intended to be the same, summarize, or provide more details about the amounts or other items in the financial
statements, with the respective amounts or other items in the financial statements.
Considering Material Inconsistency with Auditor’s Knowledge: The auditor should also evaluate if there is
a material inconsistency between the other information and the knowledge acquired during the audit,
considering the audit evidence obtained and conclusions drawn during the audit process.
Alertness to Material Misstatements: While reviewing the other information as per the guidelines mentioned
above, the auditor must stay vigilant for signs that indicate potential material misstatements in the other
information that is not connected to the financial statements or the knowledge gained during the audit.

(CNO - SA 720.100) Step 3: Responding When a Material Inconsistency Appears to Exist or Other
Information Appears to Be Materially Misstated
1. Discussion with Management: If the auditor identifies a potential material inconsistency or believes that the
other information might be materially misstated, the initial step is to discuss the matter with management.

2A. Determining Material Misstatement in Other Information: The auditor must then determine whether
there is an actual material misstatement in the other information presented.
2B. Assessing Material Misstatement in Financial Statements: The auditor should also evaluate if there's a
material misstatement in the financial statements based on the inconsistency identified.
2C. Updating Understanding of the Entity: If required, the auditor should consider whether their
understanding of the entity and its environment needs to be revised or updated based on the inconsistencies or
misstatements identified.
Step 4: Responding When the Auditor Concludes That a Material Misstatement of the Other Information
Exists
Request to Management: If the auditor concludes that a material misstatement of the other information exists,
the auditor shall request management to correct the other information.
Management's Agrees: If management agrees to make the correction, the auditor shall determine that the
correction has been made.
Management's Refusal: If management refuses to make the correction, the auditor shall communicate the
matter.

www.auditguru.in 07.23