ACCA Strategic Professional · Advanced Audit and Assurance (International) · Completion and final review
Whilst auditing Zenith Co's financial statements for the year ended 31 December, the auditor obtains the draft annual report, which contains a chairman's statement and a strategy review, before the date of the auditor's report. Under ISA 720 (Revised), what is the auditor's basic responsibility regarding this other information?
The auditor must read the other information and consider whether it is materially inconsistent with the financial statements or with the knowledge gained during the audit. ISA 720 (Revised) does not require an opinion or reasonable assurance on other information, so separate verification or opinions are not needed.
- ATo read the other information and consider whether it is materially inconsistent with the financial statements or with the knowledge obtained in the auditCorrect
- BTo perform audit procedures on the other information to obtain reasonable assurance that it is free from material misstatement
- CTo express a separate opinion on the other information in a dedicated section of the auditor's report
- DTo verify every figure in the other information against the accounting records
Explanation
ISA 720 (Revised) requires the auditor to read the other information and consider whether there is a material inconsistency with the financial statements or with knowledge obtained in the audit. It does not require an opinion or assurance on that information. Option B wrongly applies audit-level assurance.
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