Reference no: EM132607282

You have completed the audit of the financial report of Doors & Windows Ltd (Doors & Windows), and the client is in the process of preparing its annual report. Doors & Windows has provided you with a first draft of the annual report for review and, having reviewed the financial report contained within the annual report, you are satisfied that it is consistent with the audited information. You are now reviewing the preliminary information contained within the annual report. Within the chairperson's review of operations, you note the following statement:

• "The directors are of the opinion that the economic conditions currently facing Doors & Windows Ltd will soon abate, and closure of additional manufacturing facilities will be unnecessary".
• You are quite surprised, as your discussions with management have indicated that closure of two further factories is imminent. In addition, the financial report includes a large provision for redundancies, together with disclosure of the nature of the item. You approach the CEO with your concerns, and he replies: 'Don't worry-it's only a first draft, and anyway the auditors don't report on that'.

Required

Question (a) Outline the auditor's responsibilities with respect to information accompanying a financial report.

Question (b) Indicate the most appropriate course of action for you as the auditor if the chairperson's review of operations is not amended.