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Heya Kim,
It’s given in bpp that if other information is misstated and the management:
– refuses to correct it, this should be included in other info section of the report
– corrects it, auditors must communicate with those charged with governance and modify the report or withdraw from engagement aNd then include other info sec after basis of opinion in reportI just wanted your confimation on this cause it feels like this would make more sense if it was vice versa.
Thank You !
See on page 120 of our notes – we only touch on this in AA because it is more examinable in AAA:
? Other information paragraph
Typically, drawing attention to a statement in the directors’ report or chairman’s report which
contradicts with what is in the financial statements.This is on a page about “additions to the auditor’s report that do NOT affect the opinion”.
Suppose the misstatement is in the chairman’s statement (an example of “other information”) and management refuses to correct it. The auditor will ask TCWG (if separate from management) for correction. If still uncorrected, the auditor will report the misstatement in the “other info” para (as above). If corrected, the matter is resolved – the other info para will simply state management’s responsibility for the other info and that the auditor’s responsibility is only to read it and consider its consistency and concluded “We have nothing to reporting in this regard”.
What you have quoted as action in the case of correction is further action that may be appropriate if NOT corrected in very, very, very rare situations (so rare I have never seen), where refusal to correct “casts such doubt on the integrity of management and TCWG as to call into question the reliability of audit evidence in general” – i.e. all audit evidence now seems unreliable.
In such an extreme case, the auditor would disclaim an opinion of the financial statements – like I said, this is improbable (and not accept reappointment) or withdraw from the audit (if permitted under applicable law or regulation).
This is more AAA than AA.
Perhaps there’s an error in the bpp other information process diagram.
Thank you so much for the detailed explanation, really appreciate it!
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