Audit and Assurance · The Independent Auditor's Report

Other Information and Auditor's Report Responsibilities under ISA 720

Updated 11 October 2026

Other information is financial or non-financial information in the annual report, outside the financial statements and the audit report. Under ISA 720 the auditor reads it, compares it with the financial statements and audit knowledge, and reports any uncorrected material misstatement. The audit report separately states management's and the auditor's responsibilities.

Understand Other Information and Auditor's Report Responsibilities

An annual report contains more than the financial statements. It usually has a chairman's statement, a strategic report, a directors' report, governance disclosures and other narrative or figures. This is called other information. The auditor does not give an opinion on it.

Even so, it matters. If the other information says profit rose 20% but the financial statements show 5%, readers lose trust in the whole report. So ISA 720 (Revised) requires the auditor to read the other information and consider whether it is materially inconsistent with the financial statements or with what the auditor learned during the audit. The auditor also stays alert for anything that otherwise looks materially misstated.

A material misstatement of other information exists when it is wrongly stated or misleading in a way that could influence users. The auditor discusses it with management and asks them to correct it. If management refuses, the auditor tells those charged with governance.

If the misstatement is in other information obtained before the report date and is still uncorrected, the auditor describes the misstatement in the Other Information section of the report. The auditor may also consider other actions, such as taking legal advice or, where law or regulation permits, withdrawal.

If the other information is obtained after the report date, the auditor reads it. If it is materially misstated, the auditor asks management to correct it and tells those charged with governance. If it is still not corrected, the auditor takes appropriate action, for example legal advice or other steps to bring the matter to users' attention.

The audit report has an Other Information section when the auditor has obtained, or expects to obtain, other information. It says what the other information is, that the opinion does not cover it, and that the auditor has a responsibility to read it and consider whether it is materially inconsistent with the financial statements or the auditor's knowledge. It then states either that there is nothing to report or describes the uncorrected misstatement.

The report also has sections on responsibilities. Management prepares the financial statements, maintains internal control and assesses going concern. The auditor obtains reasonable assurance, issues the report, and exercises professional judgement and scepticism. Those charged with governance oversee the reporting process. The split matters because the auditor does not take over management's duties.

Key rules to remember

ISA 720 core duty: Read other information → consider inconsistency with financial statements and audit knowledge → respond to material misstatement; The auditor gives no opinion and no assurance on other information.
Timing: Obtain other information before the date of the auditor's report where possible; If other information is obtained after the report date, the auditor reads it, requests correction of any material misstatement, and takes appropriate action if it is not corrected.
Response to uncorrected misstatement: Discuss with management → request correction → if refused, communicate with those charged with governance → consider report and further action; If found before the report date and uncorrected, describe it in the Other Information section.
Other Information section when nothing to report: "We have nothing to report in this regard."; Used when no uncorrected material misstatement of other information is found.
Responsibility split: Management/TCWG: prepare, control, going concern. Auditor: opinion, reasonable assurance, scepticism.; Reasonable assurance is high but not absolute.

How to solve Other Information and Auditor's Report Responsibilities questions

Use this method for any question on other information or the responsibility statements.

1Identify the other information: anything in the annual report outside the audited financial statements and the audit report.
2State that the auditor must read it and compare it with the financial statements and with audit knowledge, but gives no opinion on it.
3Spot the issue in the scenario: an inconsistency, a misstatement in other information, or an error in the financial statements.
4Apply the response: discuss with management, request correction, then escalate to those charged with governance if uncorrected.
5State the effect on the audit report: if the misstatement was found in other information obtained before the report date and is uncorrected, the Other Information section describes it. The opinion on the financial statements is unaffected unless the financial statements themselves are wrong.
6For responsibility questions, split duties clearly: management prepares and controls, the auditor forms an opinion.
7If the misstatement is found in other information obtained after the report date, state that the auditor asks management to correct it, tells those charged with governance, and takes appropriate action if it stays uncorrected, such as legal advice or other steps to bring the matter to users' attention.

Quickest way: Read, compare, report

When to use it: Use in Section A or B multiple-choice questions on other information, and as a plan for a short written answer.

Ask: is the item inside or outside the audited financial statements? Outside means other information.
Remember: read and consider, no opinion, no assurance.
If the misstatement is in other information, the opinion on the financial statements does not change on that basis alone.
If management refuses to correct, the auditor tells those charged with governance and describes it in the report.
For responsibilities, match the verb: prepare, maintain and assess belong to management; obtain assurance and report belong to the auditor.

Common mistakes in Other Information and Auditor's Report Responsibilities

Saying the auditor gives an opinion on other information.
The auditor signs the whole annual report in the student's mind.
Fix: Write that the opinion covers only the financial statements. For other information the auditor reads and considers, and reports.
Modifying the opinion on the financial statements because other information is misstated.
Students link any misstatement to a qualified opinion.
Fix: A misstatement in other information is reported in the Other Information section. Modify the opinion only if the financial statements are misstated or evidence is lacking.
Skipping the discussion with management and going straight to reporting.
Students jump to the report because it is the final output.
Fix: Show the sequence: discuss, request correction, then escalate and report if unresolved.
Blurring management's and the auditor's responsibilities.
Both deal with the financial statements, so the roles seem shared.
Fix: Management prepares them, maintains internal control and assesses going concern. The auditor expresses an opinion and obtains reasonable assurance. Say that management, not the auditor, is responsible for preventing and detecting fraud and error, while the auditor assesses fraud risk and obtains reasonable assurance.
Treating the auditor's duty as a full audit of the other information.
Students expect detailed testing of narrative sections.
Fix: The work is reading and considering consistency, not gathering sufficient appropriate evidence on it.

Worked examples

Example 1

Zeta Co's annual report includes a chairman's statement saying revenue grew by 15%. The audited financial statements show revenue grew by 6%. Management refuses to change the statement. Explain the auditor's responsibilities and the effect on the audit report.

Show the solution

The chairman's statement is outside the financial statements, so it is other information under ISA 720.
The auditor must read it and consider whether it is materially inconsistent with the financial statements. A 15% claim against 6% actual growth is a material inconsistency.
The auditor first discusses it with management and asks for correction.
Management refused, so the auditor communicates the matter to those charged with governance.
Because the misstatement was found in other information obtained before the report date and is still uncorrected, the Other Information section of the audit report must describe it.
The opinion on the financial statements is not modified, because the financial statements are correct and the misstatement is in the other information.
The auditor describes the misstatement in the Other Information section and may also consider other actions, such as taking legal advice or, where law or regulation permits, withdrawal. If the same misstatement were found only after the report date, the auditor would ask management to correct it, tell those charged with governance, and take appropriate action, for example bringing the matter to users' attention.

Answer: The auditor must raise the inconsistency with management and then those charged with governance, and, as it was found before the report date and is uncorrected, describe it in the Other Information section. The auditor may also consider other actions, including withdrawal where law permits. The opinion on the financial statements stays unmodified.

Example 2

Explain how the audit report shows the split of responsibilities between management and the auditor for the financial statements.

Show the solution

Management responsibilities: prepare financial statements that give a true and fair view in line with the applicable framework.
Management also maintains the internal control it considers necessary to prepare statements free from material misstatement due to fraud or error.
Management assesses the entity's ability to continue as a going concern and uses the going concern basis unless it intends to liquidate or cease trading.
Those charged with governance oversee the financial reporting process.
Auditor responsibilities: obtain reasonable assurance that the financial statements as a whole are free from material misstatement, and issue a report with the opinion.
Reasonable assurance is high but not a guarantee, because an audit performed under ISAs may not detect every material misstatement.
The auditor applies professional judgement and maintains professional scepticism throughout.

Answer: Management prepares the statements, maintains internal control and assesses going concern. The auditor gives reasonable assurance and an opinion, using judgement and scepticism. The report states both so users do not assume the auditor prepared or guarantees the statements.

Exam tips

Use the phrase 'read and consider' for the auditor's duty. Avoid 'audit' or 'verify' for other information.
In scenarios, check where the error sits. If it is in other information, the opinion is not modified for that reason alone.
For six-mark written parts, give a sequence: identify, discuss, escalate, report. Marks usually follow each step.
Learn the responsibility wording by role. Objective questions often swap management's and the auditor's duties.
Link to going concern: assessing it is management's duty, while the auditor evaluates that assessment.

Other Information and Auditor's Report Responsibilities: frequently asked questions

What counts as other information under ISA 720?

It is financial or non-financial information included in the annual report that is not the audited financial statements or the auditor's report. Examples are the chairman's statement, directors' report and strategic report.

What should the auditor do if other information is materially misstated?

Discuss it with management and ask for correction. If it is not corrected, tell those charged with governance. If it was obtained before the report date and is still uncorrected, describe the misstatement in the Other Information section of the report. If it is found after the report date, the auditor asks management to correct it, tells those charged with governance, and takes appropriate action, such as legal advice or other steps to bring the matter to users' attention.

Does a misstatement in other information lead to a qualified opinion?

Not by itself. The opinion is on the financial statements. The auditor reports the uncorrected misstatement in a separate Other Information section.

Why does the audit report list management's and the auditor's responsibilities?

It helps reduce the expectation gap. Users see that management prepares the statements and controls the business, while the auditor gives reasonable assurance and an opinion, not a guarantee.