Solutions
Other Information in Documents Containing Audited Financial Statements - SAS No. 118
Description
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This SAS is effective for audits of financial statements for periods beginning on or after December 15, 2010. Early application is permitted. This Standard supersedes the requirements and guidance in AU section 550. Along with SAS No. 119, Supplementary Information in Relation to the Financial Statements as a Whole,this SAS also supersedes the requirements and guidance in AU section 551. This Standard
- eliminates the distinction between other information that is included in an auditor-submitted document that contains the client’s basic financial statements and the auditor’s report thereon and other information that is in a client-prepared document.
- establishes a presumptively mandatory performance requirements, including that the auditor read the other information of which the auditor is aware in order to identify material inconsistencies, if any, with the audited financial statements.
- establishes presumptively mandatory performance and reporting requirements when the auditor identifies a material inconsistency with other information and the financial statements.
- establishes mandatory performance requirements when the auditor becomes aware of an apparent material misstatement of fact in the other information.
Table of Contents
Excerpts
Scope of This Statement on Auditing Standards
1. This Statement on Auditing Standards (SAS) addresses the auditor’s responsibility in relation to other information in documents containing audited financial statements and the auditor’s report thereon. In the absence of any separate requirement in the particular circumstances of the engagement, the auditor’s opinion on the financial statements does not cover other information, and the auditor has no responsibility for determining whether such information is properly stated. This SAS establishes the requirement for the auditor to read the other information of which the auditor is aware because the credibility of the audited financial statements may be undermined by material inconsistencies between the audited financial statements and other information. (Ref: par.&nbp;A1–A2)
2. In this SAS, documents containing audited financial statements refers to annual reports (or similar documents) that are issued to owners (or similar stakeholders) and annual reports of governments and organizations for charitable or philanthropic purposes that are available to the public that contain audited financial statements and the auditor’s report thereon. This SAS also may be applied, adapted as necessary in the circumstances, to other documents to which the auditor, at management’s request, devotes attention. (Ref: par. A3–A5)
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