 Welcome to this session in which we will discuss other information and supplementary information as they relate to the financial statements, the audited financial statements in the annual report. So we're going to learn what is other information and supplementary information and what's the auditor's responsibility about other information and supplementary information. Now in the previous session we looked at other information and we're done with this topic. That topic is done if you need to go to the prior session. In this session we'll focus on supplementary information. In the next session we would look at required supplementary information. So notice the difference. One is required and one is just supplementary information and this is what we will focus on in this session. So simply put what is supplementary information or simply put I'm going to refer to it as SI. Well what is that? Well it's any information presented in addition to the financial statement but it's not necessary to fairly present the financial statement. So hold on a second. So it's not necessary why am I presenting this? Well you're voluntarily presenting this. The company want to present this and it's not only voluntary they presented this it's audited. So supplementary information that's audited and voluntary. Now the auditor is engaged to audit the supplementary information so it's not required that you have your supplementary information audited but if the company wants their supplemental information to be audited then they have to engage. So it's basically simply put it's a different engagement. So why would the company pay for this extra? Well simply put it's the purpose is to provide additional information for analysis. Additional analysis. So I'm giving you more information so you would look basically at more detailed information and we're going to discuss what supplemental information is this way you'll understand that it's going to give you more information about the company. So the audit report for this supplemental information might accompany the audited financial statements or could be made readily available separately somewhere else. For example they can post the report on their website and if you want it you can download it. So simply put it can be its own separate report or part of the audit report so you could either have it either or. Now bear in mind you cannot perform this audit if the audit report so if you audited the company and you're expressing an adverse opinion if you're think about it if you're expressing an adverse opinion what does that mean it means they're not complying with gap why even what value does it give to the users to give them more information about the company about their supplemental information or if you're disclaiming now if you're unqualified or qualified that's fine but if you are if you are issuing a report expressing an adverse opinion or disclaiming an opinion then you cannot audit the supplemental information it's useless to do so because the supplemental information might include accounting or non-accounting information but all the information is derived from the financial statement now we've been talking supplemental information supplemental information so what is exactly supplemental information well before we proceed and explain what supplemental information is give you examples 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instagram facebook twitter reddit and if you're a CPA candidate join my CPA exam support group on group me where we can discuss CPA exam information with me as well as other candidate so let's talk about supplemental information as i mentioned it's derived derived means this information is coming you're bringing it from the financial statement and cover the same period so you cannot have supplemental information for year x1 for year x2 and the financial statements are for year x3 so they have to be both for the same period so let's now let's go in and let what are some examples of this well examples will be summaries extracted again i'm saying the same thing extracted derived same thing i'm emphasizing the point give me an example stop repeating the same thing and give me an example well detailed of other income as shown in the statement of operation or the income statement well let's take a look at tesla this is the income statement or statement of operation for tesla and tesla they have different lines and let's take a look specifically at other expense or income specifically they have 122 million in losses you may want to give additional information an additional schedule detailed information about those other expenses and losses this will be supplemental information now bear in mind they might have something in the notes about this number but that's even in addition to the notes you're giving supplemental information it's voluntary but it's also being audited again what's the purpose is to give you more information for the purpose of analysis what is this number coming from you could also give details of the general and administrative expenses again if you look at tesla here they have a line called selling general and administrative 3.1 billion maybe in the notes they have a little bit more of information what's included in selling general and administrative supplemental information i'll give you even more information more details breakdown and i'll tell you that information itself was audited so you can rely on it schedule of breakdown of investment property plant and equipment that those that information is from the balance sheet so any expended number any expended table containing the details of any line in the financials so you're looking at a number in the financial statement and okay here's more information more detailed information about this number go ahead and use it for your own purpose maybe will give you a better idea okay any statistical data also now what is the auditor's responsibility because this is what we care about now we know what supplemental information is now what is the auditor's responsibility well the auditor responsibility and just you you may want to memorize the statement determine whether the information is fairly stated in all material respect in relationship to the financial statement as a whole so are they fairly stated in relationship to the financial statement so the supplemental information whatever the whether the information whether s i is fairly stated what's the standard i'm looking at the financial statement as a whole is the information that you're giving me that detailed information jive with the financial statement matches the financial statement number so that's basically the standard let's take a look at the report to see exactly what it reads and once you read the report then it hopefully it will break everything down for you the you explain the information given here is presented for the purpose of additional analysis remember i told you what's the purpose of this is initial analysis and is not part of the require notice it's voluntary financial statement such information is the responsibility of management of course it's the responsibility of management was derived from the now the auditor could work on it but it's the responsibility of the management in other words they could help them prepare it it's not help them prepare it they could contribute to that work derived from the derived derived from and relates directly to the underlying accounting and other records used to prepare financial statement it's extracted derived from the financial statement everything that i told you now this is the official report the information has been subject to the auditing procedures what are those auditing procedures we're going to talk about them applied in the audit of the financial statement and certain additional procedures what are those additional procedures so what would they do well comparing and reconciling such information directly with the accounting and other record used to prepare the financial statement so simply put here they're explaining exactly what the auditors would do they would look at the supplemental information reconcile it compare it to the financial statement and hopefully everything matches it should matches or to the financial statement themselves or other procedures according to accordance with the auditing standard generally accepted accounting generally accepted in the united states of america or whatever you know standard you are using in our opinion the information is fairly stated in all material respect in relationship to the financial statement as a whole notice this statement right here that i started with so simply put this is the report once again this report could be a separate report can be downloaded from anywhere easy to find for the users or it can be part of the audit report a separate paragraph now what procedures used to meet those those objective right there we cover them let's review the procedures you you can make inquiries with management about the purpose of the supplemental information why are you preparing this understand how the information was prepared if they prepared it's just stop let's talk to us reconcile what which which we see in the audit report understand any assumptions or estimate the company is making evaluate the completeness is everything there also the most important thing is get management representation about the points above and the availability of the supplemental report simply put you want the management to explicitly state that's their responsibility everything here is their responsibility and the report will be available whether it's part of the audit report or available somewhere that can be easily accessed so this is the supplemental information what should you do now go to farhatlectures.com if you're not a subscriber subscribe and start to work multiple choice questions don't shortchange yourself the CPA exam is important i present the material differently than your CPA review course and the i hope that i can help you understand it better and if i do please don't shortchange yourself subscribe the next topic we would look at is rsi required supplemental information we need to see what this is what's the auditors responsibility so on and so forth good luck study hard and of course stay safe