Understanding and evaluating the effectiveness of ASA 720, The Auditor’s Responsibilities Relating to Other Information, and its role in the current environment.

This report examines reporting practices and evaluates the effectiveness of the enhanced disclosures in the auditor’s report relating to other information as required by the revisions to ASA 720, The Auditor's Responsibilities Relating to Other Information, which became effective on and after 15 December 2016. Other information refers to the financial or non-financial information other than the financial report and the auditor’s report thereon included in an entity’s annual report (ASA 720 para 12). ASA 720 requires auditors to read the other information and consider whether there is a material inconsistency between the other information and the financial report, or the auditor’s knowledge obtained in the audit, to respond appropriately when the auditor identifies that such material inconsistencies appear to exist, or when the auditor otherwise becomes aware that other information appears to be materially misstated, and to report in accordance with ASA 720 (as outlined under ASA 720 para 11). Auditors are further required to disclose the timing of the receipt of the other information (i.e., whether the other information was obtained prior to, or expected to be obtained after, the date of the auditor’s report); identification (i.e., what types of other information are reviewed), and conclude in supporting their opinion (i.e., whether or not there is a material misstatement in the other information). This information is required to be disclosed in a separate section in the auditor’s report with the heading “Other Information”, or other appropriate heading (ASA 720 para 21-22)1. In this report, we provide descriptive evidence and analyse the disclosures and trends in disclosures contained in the other information section of the auditor’s report. Based on our findings, we provide a series of recommendations to encourage further improvements in the quality and integrity of corporate reporting and to assist entities with their future reporting.