Other Information and Supplementary Information A10

Question 1

What conditions must be met before the auditor may issue an opinion on supplementary information?

Answer 1

The supplementary information was derived from and relates directly to the information used to prepare the financial statements.

An auditor may issue an opinion on supplementary information if a qualified opinion is issued on the financial statements. However, the auditor may not issue an opinion on supplementary information if an adverse or disclaimer of opinion was issued on the financial statements.

An auditor may issue an opinion on supplementary information if it is in the same document as the audited financial statements. There is no requirement that the supplementary information be included in a separate document from the audited financial statements. If supplementary information is included in a separate document from the audited financial statements, then the auditor should report on supplementary information in a separate report.

Question 2

What type of an opinion will an auditor give on supplementary information?

Answer 2

• An auditor is not required to audit required supplementary information, but the audit report should include a separate report section with the heading “Required Supplementary Information” related to the supplementary information. This section should state that the required supplementary information is included and the auditor has applied the required procedures
• The auditor may express an opinion on the information, if he or she has been engaged to examine it.
• The auditor may report on whether the information is fairly stated in relation to the financial statements taken as a whole, if appropriate auditing procedures have been applied.
• The auditor may disclaim an opinion on the information.
• The auditor’s report on supplemental information should include a statement that the supplemental information has been subjected to audit procedures performed in conjunction with the audit of the financial statements.
• The auditor’s report on supplemental information should include a statement that the supplemental information is the responsibility of management.
• When the auditor chooses to apply auditing procedures to the supplementary information, he or she may express an opinion regarding whether the supplementary information is fairly stated in all material respects in relation to the financial statements taken as a whole.
• When the audit engagement includes reporting on selected financial data, the report prepared by the auditor should be limited to the data that was obtained from the financial statements

Question 3

When should an auditor issue a disclaimer of opinion of supplemental information?

Answer 3

• If the auditor is unable to obtain sufficient appropriate audit evidence to support an opinion on the supplemental information
• In those situations, the auditor’s report on the supplemental information should describe the reason for the disclaimer and state that the auditor is unable to and does not express an opinion on the supplemental information.

Question 4

What is the Auditors Responsibility in required supplemental Information?

Answer 4

• An auditor should perform limited procedures on required supplementary information.
• An auditor is required to report omissions of required supplementary information in a separate section with the heading “Required Supplementary Information” for a nonissue or explanatory paragraph for issuer.
• Unlike other information, the auditor has to perform procedures beyond just reading for required supplementary information.
• would not perform a review or express negative assurance on supplementary information required by GAAP.
• The auditor may express an opinion on the information, if he or she has been engaged to examine it.
• The auditor may report on whether the information is fairly stated in relation to the financial statements taken as a whole, if appropriate auditing procedures have been applied.
• The auditor may disclaim an opinion on the information.
• An auditor should ask management about any significant assumptions underlying the presentation of the information when engaged to report on supplementary information in relation to the financial statements as a whole.
• An auditor should obtain written representations from management regarding the supplementary information when engaged to report on supplementary information in relation to the financial statements as a whole.

Question 5

What should be reported when a auditor is engaged to audit Other Information on the audited financials?

Answer 5

• the report prepared by the auditor should be limited to the data that was obtained from the financial statements
• If the quarterly data required by SEC Regulation S-K have been omitted, the auditor’s report must include a statement indicating that the company has not presented such data.
• The auditor’s report should only state that the auditor was unable to review quarterly data required by SEC Regulation S-K when the data have been included, but the auditor has not reviewed such data.
• If an entity is required to file quarterly reports, a review of this quarterly data is also required. Such review should be completed before the quarterly report is filed, not postponed to a subsequent quarter.

Question 6

What are the three different separate sections in the audit report?

Answer 6

Separate Section titled:

• “Substantial Doubt about the Entities Ability to Continue as a Going Concern”
• Other Information (Predecessor Auditor missing report)
• Other Supplementary Information inconsistency when engaged to audit otherwise can go in the EOM paragraph.

Question 7

What should the Auditor do if mgmt refuses to correct misleading other information?

Answer 7

2. If management refuses to revise other information, the auditor may include a separate “Other Information” section describing the inconsistency.
3. If management refuses to revise other information, the auditor may withhold the use of the auditor’s report.
4. If management refuses to revise other information, the auditor may withdraw from the engagement.

Question 8

How should the Auditor handle an engagement when client is using incorrect format and wording?

Answer 8

• An auditor should not sign a preprinted report form that includes statements that are inconsistent with the auditor’s responsibility. Instead, the form should be revised or a separate, more accurate report should be attached.