Which of the following statements is TRUE regarding the auditor's responsibility for 'Other Information' included in an annual report containing audited financial statements (e.g., the President's Letter)?

Answer options:

The auditor must audit the other information and express an opinion on it.

The auditor has no responsibility for other information.

The auditor should read the other information to identify material inconsistencies with the audited financial statements.

The auditor must perform analytical procedures on the other information.

How to approach this question

Recall AU-C 720. Keyword: READ. Purpose: Consistency check.

Full Answer

C.The auditor should read the other information to identify material inconsistencies with the audited financial statements.✓ Correct

The auditor's responsibility for other information (OI) is to read it and consider whether a material inconsistency exists between the OI and the financial statements. If there is an inconsistency, the auditor must determine if the financials or the OI needs revision.

Common mistakes

Thinking the auditor audits or ignores the other info.

Question 35 All questions Question 37

Practice the full CPA AUD Practice Exam 3

78 questions · hints · full answers · grading

More questions from this exam

Q01A CPA firm is performing an audit of a nonissuer in accordance with GAO Government Auditing Stand...Hard Q02During the audit of an issuer, the engagement partner learns that the firm's tax partner, who pro...Hard Q03An auditor is planning an audit of a nonissuer's financial statements. The auditor decides to use...Medium Q04An auditor is assessing control risk for a nonissuer's revenue cycle. The auditor identifies that...Hard Q05During the audit of a manufacturing company's inventory, the auditor utilizes a variables samplin...Hard

View all 78 questions →