SA 720 requires the auditor to read the other information in the annual report — the director's report, management discussion and analysis, chairman's statement and similar non-financial-statement content — and consider whether it is materially inconsistent with the audited financial statements or with the auditor's knowledge obtained during the audit, even though the auditor does not express an opinion or any form of assurance on that other information. If a material inconsistency is found, the auditor has to determine whether the financial statements or the other information needs correction, and act accordingly.
What counts as 'other information'
- Director's report and board's report required under the Companies Act
- Management discussion and analysis
- Corporate governance statements and sustainability or CSR disclosures bundled into the annual report
- Chairman's or CEO's letter to shareholders
- Financial summaries and highlights presented outside the audited financial statements themselves
What the auditor has to do with it
- 01Obtain the other information before the report date, where possibleThe standard expects this to happen before the auditor's report is dated — reading it after issuance defeats the purpose of the requirement.
- 02Read it for material inconsistency with the audited financial statementsNumbers quoted in the director's report (turnover, profit, key ratios) have to tie to the audited figures.
- 03Read it for material inconsistency with the auditor's knowledge from the auditA statement in the MD&A that contradicts something the auditor knows from fieldwork — e.g. claiming no related-party transactions when the audit identified some — is in scope even if it doesn't touch a reported number directly.
- 04Respond if a material inconsistency is foundDiscuss with management; if the financial statements need correction, that's handled under the applicable SA for misstatements; if the other information needs correction and management refuses, consider the effect on the auditor's report, including describing the uncorrected material misstatement of the other information.
Regulatory requirement
The auditor's report under SA 720 includes a statement that no opinion or assurance conclusion is expressed on the other information — that disclaimer is itself a required element of the reporting, not optional boilerplate.
Signing the audit report before the director's report is finalised, with an intention to 'check it later,' leaves the SA 720 read undone at the point the report is issued. If other information isn't available by the report date, the standard still requires performing the read once it is obtained, and taking appropriate action if an inconsistency turns up after the fact.
This is practical guidance written for audit teams, not an authoritative statement of any standard or statute. Standards, forms and timelines change. Check the current text issued by the ICAI and the relevant authority before relying on anything here in an audit file.
Related resources
- Audit workflow & automationSA 700: forming an opinion, and what "true and fair" actually requires concluding onFinishing every planned procedure isn't the same as forming an opinion. SA 700 is the step that happens after the checklist, not instead of it.
- Audit workflow & automationSA 706: emphasis of matter and other matter paragraphs, and when each appliesBoth paragraphs sit inside an unmodified opinion. The difference is what they're pointing at — something already in the financial statements, or something outside them.
- CARO & Companies ActSecretarial compliance checklist for a statutory auditorBoard meeting frequency, statutory registers and ROC filing timeliness, read as evidence of compliance culture rather than a secretarial checklist in its own right.
- Audit documentationReviewing and signing off audit working papersWhat a reviewer is responsible for, a defensible review order, writing points that get cleared properly, and why approval must lapse when the paper changes.
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