Question

Which of the following best describes the auditor's responsibility for "other information" included in the annual report to stockholders that contains financial statements and the auditor's report?

A) The auditor is not required to perform any procedures on the "other information."
B) The auditor should perform limited procedures to identify material inconsistencies with the audited financial statements.
C) The auditor is responsible for conducting a detailed examination of the "other information" to ensure its accuracy.
D) The auditor's responsibility is limited to ensuring the formatting and presentation of the "other information" meet industry standards.

Answer 1

The auditor should perform limited procedures to identify material inconsistencies with the audited financial statements best describes the auditor's responsibility for "other information" included in the annual report to stockholders that contains financial statements and the auditor's report.

Therefore, correct option is B) The auditor should perform limited procedures to identify material inconsistencies with the audited financial statements.

Step-by-step explanation:

The auditor's responsibility for "other information" in the annual report involves performing limited procedures to identify any material inconsistencies with the audited financial statements. This is in accordance with professional auditing standards, recognizing the importance of ensuring the overall coherence and reliability of information provided to stakeholders. While the auditor's primary focus is on the financial statements, they have a responsibility to consider whether the "other information" is consistent with the audited financial statements and whether any material misstatements exist.

It's important to note that the auditor is not required to conduct a detailed examination of the "other information" or ensure its formatting and presentation meet industry standards. However, they are obligated to exercise professional judgment and skepticism in assessing the reasonableness of the "other information" in relation to the audited financial statements.

Auditors play a crucial role in maintaining the integrity and transparency of financial information, and understanding their responsibilities regarding "other information" is vital for ensuring accurate and reliable financial reporting.

Therefore, correct option is B) The auditor should perform limited procedures to identify material inconsistencies with the audited financial statements.