Wiley Practitioner's Guide to GAAS 2022

36AU-C 720 Other Information in Documents Containing Audited Financial Statements

• Scope
• Definitions of Terms
• Objective of AU-C Section 720
• Requirements
  • Responding to a Material Misstatement of Other Information
  • Reporting
  • Documentation
• Illustrations: Other Information Sections to be Included in Auditor's Reports Relating to Other Information Included in The Annual Report

SCOPE

AU-C 720 offers auditors guidance on their responsibilities related to other information, financial or nonfinancial, in an entity's annual report. (AU-C 720.01)

Other information may include a report by management or those charged with governance on operations, financial summaries or highlights, employment data, planned capital expenditures, financial ratios, names of officers and directors, and selected quarterly data. (AU-C 720.A13)

DEFINITIONS OF TERMS

Source: AU-C 720.12. For definitions related to this standard, see Appendix A, “Definitions of Terms”: Annual report, Misstatement of the other information, Other information.

OBJECTIVE OF AU-C SECTION 720

AU-C 720.11 states that the objectives of the auditor, having read the other information, is to:

• Consider whether a material inconsistency exists between the other information and the financial statements.
• Remain alert for indications that:
  • A material inconsistency exists between the other information and the auditor's knowledge obtained in the audit or
  • A material misstatement of fact exists or the other information is otherwise misleading ...