 Hello and welcome to this session in which we would look at other information and supplementary information as they relate to the auditing of financial statements. So in this session we are going to explain what is other information and what is the auditor's responsibility when it comes to other information. Now under the umbrella of other information and supplementary information we have three categories which is one of them called other information. The second one is supplementary information and the third one is required supplementary information. In this session I will focus on other information and we'll cover the other two in the other session. So what is other information or I'm going to refer to it as OI. Basically other information is simply put information that is not audited, unaudited and voluntary information included in the annual report or information that accompanies the financial statements, the basic financial statements that the auditors prepared. Now this information could be financial in nature or non-financial in nature, it could be either or. But we have to keep in mind this information does not include, it's other than the basic financial statements, what are the basic financial statements, the income statement, the balance sheet, the statements of stockholders' equity, the statement of cash flows and the notes. So it doesn't include those, so that's excluded. So simply put if you want to look at this from a pictures perspective, this is the annual report for Tesla company as of December 31st, 2020. Now the basic financial statements would denote starting at item 8 all the way to item 9B. So this is so from page 50 to page 107, this is the financial statement, if you look at the report, this includes the financial statements, the basic financial statements plus the notes. Now everything else in the annual report is not part of the basic financial statements. So some of it could be SI, supplementary information, some of it could be supplementary, required supplementary information like MDNA. For example, selected consolidated financial statement, this is called other information. Everything that you see here when they talk about the business and I will show you an example about the business, risk factor, unresolved staff commitment, properties, legal proceedings, mind safety disclosure and other information down here. That's considered other information. So the other information could include financial ratios, you're more than welcome to download the report, the president's letter, employment data, financial summaries, selected quarterly data, capital asset spending, and other and much, much more other information. The other information does not include, so it executes, I want to make sure that it executes. We already know it executes the basic financial statements and denote. It also executes anything that's considered required supplementary information, which we will have a whole session about this. It will exclude any press release or releases for that matter, and it will exclude the cover letter. That's the reason why we are mentioning those three, because based on a previously released AI CPA questions, they do ask you what is not included in other information that could be part of the problem. So now we know what is other information. Now we need to know the auditor's responsibilities. What are the auditor's responsibilities when it comes to other information? What do they have to do with this other information? Before we discuss the auditor's responsibility, whether you are a student or a CPA candidate, most likely you are a CPA candidate looking for some help about this topic. I'm glad you found me. I can help you. I can help you supplement your CPA review course. I can help you supplement your accounting course. My resources are aligned with your Wiley, Gleam, Roger, Becker. It doesn't really matter. I provide you over 1500 previously released AI CPA plus thousands of MCQs and CPA questions that's going to help you prepare for the exam. My lectures are very beneficial to you and often time the lectures make a difference in understanding the topic. I suggest you give me a try. Take a look at my website. Also, if you have not connected with me on LinkedIn, please do so. Take a look at my LinkedIn recommendation. Like this recording. Share it with other. If you're watching, it means it's helping you. Like it. Share it. Connect with me on Instagram, Facebook, Twitter, Reddit. And if you're a CPA candidate, I have a CPA exam group on GroupMe. Please join me and other CPA candidate in preparing for the exam. So what is the auditor's responsibility? Well, if the material inconsistency exists before the release of the financial statement, well, hopefully we catch that before, something should be revised, either the financial statement are wrong or the other information is wrong because there is a material inconsistency. What we're saying on the income statement is different than what they're showing in the other information. If the issue is a financial statement issue, well, we have to fix it. And if the management refuses, we either modify or withdraw. You know what we have to do. If the other information is the information that's incorrect, and that's most likely like the case, we ask the management to fix it. If they refuse, we have to communicate with those charged with governance, some the people above management, or we could add other information paragraph describing the issue in our report. And in that paragraph, we have to explicitly state that the other information is the management responsibility. And we do not express an opinion on the other information. And the other information is not part of the financial statement. So we have to tell the user users clearly it's other information. The management prepared it. We did not audit that information were not responsible for it. And this is what the paragraph would look like. And this is from the AI CPA literature. Management is responsible for the other information included in the report. The other information comprised, and we have to explain it here, but does not include the financial statement and our auditors report. So simply put, that other information is not our responsibility. And it's not part of the financial statements that we audited. Our opinion on the financial statement does not cover the other information. And we do not express an opinion or any form of assurance on this other information. In connection with our audit of the financial statements, our responsibility is to read. Remember, read and remain alert. Read the other information and consider whether a material inconsistency, notice the language, material inconsistency exists between the other information and the financial statements that we audited. So our job is to read them. And if there's anything unusual, we're just going to let you know that's about it. But we did not audit that information. Now in the real world, this does not happen because management will go ahead and fix that problem. If they don't, and we, if they don't, and we think that this issue, this, this, that discrepancy tells us something about the client integrity. Simply put, if we think they are lying to us or they're lying to their investors, why, if someone is lying, why wouldn't they lie to us as well? So if we think their integrity is susceptible, we just simply disclaim. We don't give an opinion. And if it's really bad, if we think it's really, it's, we should not associate our self with them as the auditor, we would simply withdraw. Now what happened if we discover the, the material inconsistency after the release of the financial statement and the audit report? Well, again, we need to determine whether it's a financial statement issue or other information. Now we assume it's other information. If revision is done, let's assume we told the management that you have to revise it. We still have to review and evaluate those revisions because we, we, we figure out there's an inconsistency and they revised it. If management refused to make those revisions, well, we have to inform those in charge with governance, the board of directors. We have to seek legal counsel from our own counsel because now we are exposed. Why, why? Because we signed that audit report and people might, users might associate our signature with that other information. So that's why we have to see what, what do we have to do? So this is about material inconsistency. The other thing that we need to be aware of is material misstatement of fact. Simply put in quote, a lie. So material inconsistency where I showed you where in the income statement we show 31 billion in the other information, we show 35 billion of revenue. That's a material inconsistency. Misstatement of fact is simply a lie. What is, what would a lie would look like? Well, and this is basically from the Tesla report. And this is basically from part one of their business. They're talking about their financial services and they offer insurance. In August 2019, we launched an insurance product designed for our customers, which offer rates that are often better than, better than other alternative. This we're discussing Tesla, Tesla and their customers. This product is currently available in California. Let's assume they wrote this, this product is available in the United States. Or if they say it's available and we know it's only available in California, then this is a misstatement of fact. Then we have to kind of let them know that's not acceptable. Okay. Notice the difference. It's not material inconsistency here. It's misleading. It's misleading or a misstatement of fact. So we have to point out, look, you have to put it's available only in California. But anything that's similar to that case will have to be pointed out. So we have to discuss it with management first. And we have to tell management, look, if you're not going to change it, make sure you talk to your legal counsel because you have exposure. Why? Because you are lying. You are simply lying and that's not going to fly well with investors. If management refuses and form again, dose and charge of the governance because they're simply lying and you don't want that. Now what should you do now? Go to farhatlectures.com. If you're not a subscriber, subscribe, work multiple choice through folks. In the next session, we would look at supplemental information. The CPA exam is worth it. Invest in yourself, invest in your career. Good luck, study hard and of course, stay safe.