Auditor’s responsibilities regarding the publication of annual financial reports and management reports issued by institutions of the health and social services network
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Each fiscal year, institutions of the health and social services must file an annual financial report (AS-471), which must include the independent auditor’s report. According to the second paragraph of section 295 of the Act Respecting Health Services and Social Services (CQLR c S-4.2), “The institution shall publish its annual financial report on its website within 30 days after the report is adopted by the board of directors, subject to the protection of the personal information it contains.”
Institutions must also prepare an annual management report (AMR) that must also be published on their website (CQLR c S-4.2, s. 182.9). The information circular on annual management reports issued by the Ministère de la santé et des services sociaux (MSSS) (codified 03.01.61.19) specifies the disclosure requirements. The disclosures for the financial statements and the analysis of the results of operations come from the annual financial report and constitute summary financial statements. The institution provides an independent auditor’s report on these statements.
Similar provisions apply to health and social service agencies.
In both situations, the independent auditor is associated with the annual financial report and the annual management report since his independent auditor’s report is appended to AS-471 and the summary financial statements. The auditor must comply with CAS 720 The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements.
The auditor’s objective is to respond appropriately when documents containing audited financial statements and the auditor’s report thereon include other information that could undermine their credibility.
To this end, the standard requires that the auditor read the other information in documents they are associated with to identify material inconsistencies, if any, with the audited financial statements. The auditor must make appropriate arrangements with management or those charged with governance to obtain the other information prior to the date of the auditor’s report. If it is not possible to obtain all the other information prior to the date of the auditor’s report, the auditor must read such other information as soon as practicable.
The institution publishes its AS-471 and AMR in hard copy and on its website. The auditor must therefore apply measures for both types of publication medium to ensure that the financial statements and the independent auditor’s report are accurately reproduced and the other information does not undermine the credibility of the financial statements and the auditor’s report.
For example, here are some procedures the independent auditor should perform to comply with the requirements of the standard. This list is not exhaustive and the procedures may vary depending on the circumstances.
For AS-471 |
|
|---|---|
| Hard copy | Internet |
| Normal procedures | Obtain the PDF file produced by the institution's LPRG-Web software |
| Ensure that it corresponds to the audited hard copy version | |
| Obtain the PDF file from the institution's website | |
| Compare both files | |
For the annual management report |
|
|---|---|
| Hard copy | Internet |
| Obtain the formatted version of the AMR | Obtain the file that will be published on the website |
| Compare the summary financial statements and the independent auditor's report to ensure they are accurate | Compare the summary financial statements and the independent auditor's report to ensure they are consistent with the audited hard copy version |
| Read the other information presented in the AMR to ensure that there is no information that could undermine the credibility of the financial statements and the independent auditor's report | Read the other information presented in the AMR to ensure that there is no information that could undermine the credibility of the financial statements and the independent auditor's report |
| Send the changes to the institution | Sent the changes to the institution |
| Obtain the final print-ready version for validation | Obtain the final version of the file for verification before it is published on the website |
| Ask the entity to send you a copy as soon as possible | Ask the identity to inform you as soon as the report is published |
| Compare the hard copy with the printer's copy | Compare the published document with the final version of the file |
The requirements of CAS 720 should be included in the engagement letter signed by the entity to ensure management buy-in.
Note that CAS 720 is currently being revised. Changes are expected in the auditors’ responsibilities regarding the publication of documents containing audited financial statements and the independent auditor’s report.
As mentioned above, the current objective is to respond appropriately when documents containing financial statements and the independent auditor’s report thereon include information that could undermine their credibility. Two fundamental changes are being made to this objective:
- increased emphasis on identifying material inconsistencies in the other information,
- reporting under the CAS in keeping with the results of the procedures performed on other information as required by the standard. The report would also contain a statement specifying that the auditor has not audited or reviewed the other information.
The final standard should be adopted during 2014.
Working group on the health and social services network