Guide to Using International Standards on Auditing in - IFAC
Guide to Using International Standards on Auditing in - IFAC
Guide to Using International Standards on Auditing in - IFAC
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<str<strong>on</strong>g>Guide</str<strong>on</strong>g> <str<strong>on</strong>g>to</str<strong>on</strong>g> <str<strong>on</strong>g>Us<strong>in</strong>g</str<strong>on</strong>g> <str<strong>on</strong>g>Internati<strong>on</strong>al</str<strong>on</strong>g> <str<strong>on</strong>g>Standards</str<strong>on</strong>g> <strong>on</strong> <strong>Audit<strong>in</strong>g</strong> <strong>in</strong> the Audits of Small- and Medium-Sized Entities Volume 1—Core C<strong>on</strong>cepts<br />
Paragraph #<br />
Relevant Extracts from ISAs<br />
720.14 If, <strong>on</strong> read<strong>in</strong>g the other <strong>in</strong>formati<strong>on</strong> for the purpose of identify<strong>in</strong>g material <strong>in</strong>c<strong>on</strong>sistencies, the<br />
audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r becomes aware of an apparent material misstatement of fact, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r shall discuss<br />
the matter with management. (Ref: Para. A10)<br />
720.15 If, follow<strong>in</strong>g such discussi<strong>on</strong>s, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r still c<strong>on</strong>siders that there is an apparent material<br />
misstatement of fact, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r shall request management <str<strong>on</strong>g>to</str<strong>on</strong>g> c<strong>on</strong>sult with a qualified third<br />
party, such as the entity’s legal counsel, and the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r shall c<strong>on</strong>sider the advice received.<br />
720.16 If the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r c<strong>on</strong>cludes that there is a material misstatement of fact <strong>in</strong> the other <strong>in</strong>formati<strong>on</strong><br />
which management refuses <str<strong>on</strong>g>to</str<strong>on</strong>g> correct, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r shall notify those charged with governance,<br />
unless all of those charged with governance are <strong>in</strong>volved <strong>in</strong> manag<strong>in</strong>g the entity, of the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s<br />
c<strong>on</strong>cern regard<strong>in</strong>g the other <strong>in</strong>formati<strong>on</strong> and take any further appropriate acti<strong>on</strong>. (Ref: Para. A11)<br />
Overview<br />
Some entities, such as those with many stakeholders, will publish (<strong>on</strong> paper or electr<strong>on</strong>ically) an annual report<br />
or attach some additi<strong>on</strong>al <strong>in</strong>formati<strong>on</strong> <str<strong>on</strong>g>to</str<strong>on</strong>g> the audited f<strong>in</strong>ancial statements. Where this occurs, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r has a<br />
resp<strong>on</strong>sibility <str<strong>on</strong>g>to</str<strong>on</strong>g> read the other <strong>in</strong>formati<strong>on</strong> <str<strong>on</strong>g>to</str<strong>on</strong>g> identify any <strong>in</strong>formati<strong>on</strong> that could underm<strong>in</strong>e the credibility of<br />
the f<strong>in</strong>ancial statements and the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s report. Should such <strong>in</strong>formati<strong>on</strong> be found, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r needs <str<strong>on</strong>g>to</str<strong>on</strong>g> take<br />
appropriate steps <str<strong>on</strong>g>to</str<strong>on</strong>g> rectify the situati<strong>on</strong>.<br />
A summary of some of the key requirements is outl<strong>in</strong>ed <strong>in</strong> the exhibit below.<br />
Exhibit 15.9-1<br />
Is “other <strong>in</strong>formati<strong>on</strong>”<br />
presented with<br />
the F/S?<br />
yes<br />
no<br />
Does a material<br />
<strong>in</strong>c<strong>on</strong>sistency exist<br />
<strong>in</strong> other <strong>in</strong>formati<strong>on</strong>?<br />
yes<br />
no<br />
no<br />
Do the audited F/S<br />
need <str<strong>on</strong>g>to</str<strong>on</strong>g> be revised?<br />
Does management<br />
refuse <str<strong>on</strong>g>to</str<strong>on</strong>g> make<br />
the revisi<strong>on</strong>(s)?<br />
yes<br />
yes<br />
Does the “other<br />
<strong>in</strong>formati<strong>on</strong>”<br />
need revisi<strong>on</strong>?<br />
no<br />
Proceed<br />
Notify those charged with governance.<br />
Withhold audit report.<br />
Determ<strong>in</strong>e what other acti<strong>on</strong>s are appropriate.