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Vismay ShahVismay Shah asked 5 months ago

SIr, in this Question ICAI solution is different. ICAI\’s answer is based on the fact that once the material inconsistency in OI is found, then how an auditor will deal with it. And the answer provided by you is focusing on the auditor\’s responsibility with respect to considering the other information at first hand.

1 Answers
RaviRavi Staff answered 5 months ago

following is the given by ICAI 
Responding When the Auditor Concludes That a Material Misstatement of the Other Information Exists:
As per SA 720, “The Auditor’s Responsibility in Relation to Other Information” Descriptions of trends in market prices of key commodities or raw materials is an example of amounts or other Items that may be Included in the other information.
The auditor’s discussion with management about a material inconsistency (or other information that appears to be materially misstated) may include requesting management to provide support for the basis of management’s statements in the other information. Based on management’s further information or explanations, the auditor may be satisfied that the other information is not materially misstated. For example, management explanations may indicate reasonable and sufficient grounds for valid differences of judgment.
Auditor’s duties with regard to reporting in the given case are given hereunder:
As per SA 720, “The Auditor’s Responsibility in Relation to Other Information”, if the auditor concludes that a material misstatement of the other information exists, the auditor shall request management to correct the other information. If management:
(i) Agrees to make the correction, the auditor shall determine that the correction has been made; or
(ii) Refuses to make the correction, the auditor shall communicate the matter with those charged with governance and request that the correction be made.
Contention of the partner of the firm that auditors are not concerned with such disclosures made by the management in its annual report, is incorrect

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