 Hello and welcome to the session in which we would look at other information and supplementary information. So we need to know what these are and what is the auditor's responsibilities. Now we already looked at other information and just as a short recap other information is voluntary information and not audited and there's a one whole recording about other information. Then we talked about supplementary information. Supplementary information also voluntary information but it could be audited if engaged if the auditor engaged to do so. We already covered those too. Make sure you are familiar with them. Now we're going to be discussing required supplementary information or RSI. Well by the word required it means it's not voluntary it's required. Although it's required the first thing I want to tell you and I will emphasize this later on in the lecture because on many CPA questions what they do is as soon as they say it's required you think it's audited. Well it is required but the information is not audited. We don't issue an opinion about this information. So notice the required the required supplementary information it's in addition it's supplementary information. So what is RSI because this is the focus of this of this recording. Well it's any information that's designated by an accounting standard server which is what does that mean just by FASB or GASB. Just kind of make it easy. FASB or GASB thinks that this information must a company required to a company not audit but required the basic financial statement. So it's not part of the of the financial statements. Just think of Farhat Lectures. Farhat Lectures is a supplemental resource to your CPA preparation right. So think of it as in addition to your course not part of the basic financial statement and that designated accounting standard has determined that the information is basically essential. It's required it's essential but it doesn't have to be audited. So what are we talking about here. What is this information. Give me an example about RSI. Well an example of an RSI will be the management discussion and analysis for governmental reporting. So if you are preparing the financial statement for a governmental entity well you have to prepare it's required MDNA for governmental governmental reporting. Another example will be estimate of current or future or future cost of future major repair or replacement for common interest realty association. So certain association building condos what they do they have to disclose what is the future cost for repair and replacement for their investor. So it's a required supplemental information certain pension information it's required if you have a certain pension plan you have to disclose certain information. So this is what RSI is. So the question is what is the auditor's responsibility. So now what is the auditor's association. Now we know what RSI is what is the auditor's association. Well before we discuss the auditor association most likely you're a CPA candidate. If you're listening to this that's great. I can help you supplement now supplemental information help you supplement your CPA education. My resources are aligned with your Becker Roger Wiley gleam so it's very easy miles so it's very easy to go back and forth between my material and your CPA review course. I explain the material differently. I can help you do better. This is the reason you are here is because you are looking for help. I can help you lecture multiple choice through false. And I also provide you with 1500 previously released AI CPA questions with detailed solution. 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So the auditor responsibility is basically the following first they will need to inquire inquiry of management what's inquire just inquire ask management about certain things what are those 30 things what methods guidelines they use to create this mDNA report any significant assumption or interpretation did you make any assumptions or interpretation because in the mDNA you can see anything you want to well if you are what assumptions what interpretation that you make any method used and if you change those methods and the reason for the change for example if you use a different method last year you're using are using a different method this year from last year well I need to know why and if that method has changed also what the auditor will have to do in addition to inquiring well that's good they told us what we need to hear now compare the information for consistency that does this information consist with the basic financial statements well if they're telling an mDNA our growth is 15% well this is this consistent the you know our revenue growth is 15% is this consisting with the financial statement do we have a 15% growth we have to compare the information to what they actually tell us maybe we'll talk into three different people in the company is management response to the inquiry is consistent is one person telling us something else than another person about the same issue well we need to be aware of this any audit evidence that support or does not support what they're saying this is basically our job is to inquire and definitely we need to obtain a written representation for management that it's their responsibility now what is the auditor's responsibility after they do all of this if it's a private company what they will do they will issue a report let's take a look at a report a summary report for private companies that will generate that will not generate basically summarizes everything that we learned thus far about rsi basically it summarizes everything you need to know for rsi so let's go over this the accounting principle generally accepted which is gap require the supplementary information on page xx to be presented to supplement the basic financial statement remember what we talked about there's an accounting standard body here we are talking about gap well remember we said it's not part of the financial statement it's the supplement sign financial statement although the infer all such information although not part of the financial statements is required so notice is required it's essential required who consider it to be essential part of the financial reporting for placing the financial statement in an appropriate operational economic or his or historical contacts so it's given us more information but that's all that's all what it is that's the requirement of it we have applied limited procedures to the required supplementary information and according with the auditing generally uh standard generally accepted in the u.s basically procedures but those procedures are limited what are they they consist of inquiries of management about the method of preparing the information comparing the information for consistency with management responses to our inquiry the basic financial statements and other knowledge we obtained during the audit this is what i said on the prior on the priors on the prior slide just inquiries comparing what they're telling us if it makes sense if it jive with the financial statements if it jives with other information we are giving in the audit also we do not express an opinion no opinion is expressed so notice information is required no opinion is expressed we do not provide any opinion okay we do not provide us with sufficient evidence to express an opinion or provide any assurance what happened if the information is omitted generally speaking if the information is omitted you need to know it does not impact the financial the opinion on the financial statements although it's omitted it's essential but it's not going to impact your opinion of the financial statement now let's take a look at a simple report management has omitted the management discussion and analysis that accounting principle generally accepted the united states required to be presented to supplement the basic financial statement such missing information although not part of the financial statement is required by gas which is the government which consider it to be essential so basically what they're telling us they omitted the information here's the here's what we need to tell you that the information is omitted and just so you know now for pcaob okay we don't add a paragraph about required supplemental information but for pcaob if the information is missing if any information if any required supplemental information is missing then we issue a similar report to this one only we issue the report if the information is missing so simply put the information is omitted there's a material departure or we could not complete the procedures that we need to do and this is under pcaob at this point we issue a similar report to this one once again what should you do now go to farhatlectures.com if you're not a subscriber subscribe work through false multiple choice exercises whatever resources i can give you to help you prepare for the exam good luck study hard the exam the CPA exam is worth it it will pay you dividend down the road don't shortchange yourself