14 July 2014
International Auditing and Assurance Standards Board
545 Fifth Avenue, 14th Floor
New York, New York 10017
UNITED STATES OF AMERICA
RE: Exposure Draft - (ISA) 720 (Revised) The Auditor's Responsibilities Relating to
Other Information
Dear Sir:
Thank you for the opportunity to comment on the above Exposure Draft. I am responding
on behalf of the Office of the Auditor General of Canada.
Our responses to the specific questions posed in the Exposure Draft are provided below.
Sincerely,
Stuart Barr
Assistant Auditor General
Enclosure
cc. Greg Shields, CPA, CA
Director, Auditing and Assurance Standards
Auditing and Assurance Standards Board
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Specific Matters
1. Whether, in your view, the stated objectives, the scope and definitions, and the
requirements addressing the auditor’s work effort (together with related introductory,
application and other explanatory material) in the proposed ISA adequately describe and
set forth appropriate responsibilities for the auditor in relation to other information.
In our view, the stated objectives, the scope and definitions in the proposed ISA are
appropriately described.
The auditor’s responsibilities could be clarified. Paragraph A16, which describes
responsibilities for other information made available via an entity’s website, is not clear as
the term “other information” is used to describe information on the entity’s website that
does not meet the definition of other information set out in paragraph 12c). Use of the
same terminology is confusing. We would encourage the IAASB to provide greater clarity
around the auditor’s responsibilities for electronic versions of annual reports that are also
distributed in paper form as well as information that is displayed on an entity’s website so
as to avoid requiring interpretation of these requirements and to improve consistency of
application.
2. Whether, in your view, the proposals in the ISA are capable of being consistently
interpreted and applied.
Since the term “annual report” is defined in broad terms to allow for differing national
requirements and practice, entirely consistent interpretation and application across
jurisdictions is unlikely. We do not, however, see this as a concern.
Please see our comment concerning paragraph A16 above.
3. Whether, in your view, the proposed auditor reporting requirements result in effective
communication to users about the auditor’s work relating to other information.
We continue to hold the view that the description of the auditor’s responsibilities would be
better placed in the Auditor’s Responsibilities section of the auditor’s report for
completeness of the responsibilities presented and consistency of reports for the reasons
set our below.
Identifying the other information obtained by the auditor prior to the date of the auditor’s
report will result in more precise but inconsistent auditor’s reports in that some will list
specific other information and the auditor’s responsibilities with respect to the other
information, while other reports will include neither. This inconsistency arises since
paragraph 21 of the re-exposure draft requires the audit report section “Other Information”
-3only be presented where the auditor has obtained the final version of all or part of the other
information prior to the date of the auditor’s report. However, notwithstanding the
inclusions of a section titled “Other Information”, the auditor’s responsibilities remain the
same. In our view, this inconsistency could be avoided by presenting the auditor’s
responsibilities in the Auditor’s Responsibilities section of the auditor’s report and removing
the requirement to specifically identify the other information obtained prior to the date of
the auditor’s report.
We do not feel proposed reporting requirements are effective. The concluding phrase “We
have nothing to report in this regard” (paragraph A48) does not bring any value to the user
and we suggest it be reconsidered. Reporting a conclusion only in circumstances of
exception (material misstatements) would eliminate the need to use such neutral language
when there is no material misstatement in the other information. Exception reporting may
also reduce the risk of a conflict between ISA reporting requirements and more onerous
national reporting requirements concerning other information where such requirements
exist.
4. Whether you agree with the IAASB’s conclusion to require the auditor to read and consider
other information only obtained after the date of the auditor’s report, but not to require
identification of such other information in the auditor’s report or subsequent reporting on
such other information.
We consider that it is reasonable to require the auditor to read and consider other
information only obtained after the date of the auditor’s report, but not to require
identification of such other information in the auditor’s report or subsequent reporting on
such other information. We are concerned, however, that this requirement appears to be
an open-ended commitment without time limitation and are unclear whether the Board
considered this practical issue.
General Matters
(a) Preparers (including Small- and Medium-Sized Entities (SMEs)), and users (including
Regulators)—The IAASB invites comments on the proposed ISA from preparers
(particularly with respect to the practical impacts of the proposed ISA), and users
(particularly with respect to the reporting aspects of the proposed ISA).
(b) Developing Nations—Recognizing that many developing nations have adopted or are in
the process of adopting the International Standards, the IAASB invites respondents from
these nations to comment on the proposed ISA, in particular, on any foreseeable
difficulties in applying it in a developing nation environment.
(c) Translations—Recognizing that many respondents may intend to translate the final ISA
for adoption in their own environments, the IAASB welcomes comment on potential
translation issues respondents may note in reviewing the proposed ISA.
We have no specific comments with respect to the above.