The requirements of the Australian Auditing Standards do not differ according to whether the audited financial report and the auditor’s report are distributed to members in hard copy format or electronic copy format. However, in the latter case, the auditor considers performing additional procedures in response to the nature of electronic publication. For example:

• where applicable, determining that the requirements of the Act have been adhered to when the financial report is distributed electronically; and
• evaluating whether unaudited supplementary information is clearly differentiated from the audited financial report when such documentation is presented on a web site.

The following paragraphs provide application guidance on relevant requirements of the Auditing Standards.

Under ASA 210 Agreeing the Terms of Audit Engagements, the auditor is required to obtain the agreement of management, and where appropriate, those charged with governance, that it acknowledges and understands its responsibility for the preparation of the financial report. This responsibility includes the distribution and publication, regardless of method, of the audited financial report and the auditor’s report,.

In order to clarify responsibilities, the auditor may include in the engagement letter details regarding responsibilities and internal control in relation to the electronic distribution and publication of the audited financial reports and the auditor’s report. The engagement letter may include, for example, acknowledgements that:

1. the electronic presentation of the audited financial report and auditor’s report is the responsibility of those charged with governance;
2. security and controls over information on the entity’s website are the responsibility of the entity; and
3. the examination of controls over the electronic presentation of audited financial information on the entity’s website is beyond the scope of the audit of the financial report.

Appendix 1 contains an example of an additional paragraph that may be included in an engagement letter.

ASA 260 Communications with Those Charged with Governance, provides an overarching framework for the auditor’s effective two-way communication with those charged with governance; and identifies some specific matters to be communicated with them.

The auditor discusses with those charged with governance how the audited financial report and the auditor’s report will be published or distributed in electronic form. Particular attention must be paid to compliance with the Act (where applicable) and minimising the risk that the auditor’s report is inappropriately associated with other information.

Under ASA 580 Written Representations, the auditor is required to obtain written representations from management that it has fulfilled its responsibility for the preparation of the financial report. This responsibility covers distribution and publication of the audited financial report and the auditor’s report regardless of whether it is in hard copy or electronic copy form.

When financial reporting is under the Act, management is required to comply with the reporting requirements of the Act. See, for example, section 314 (1AA) which relates to the electronic distribution and publication of financial reports.

Accordingly and in the case of electronic publication of the audited financial report and the auditor’s report, the auditor obtains written representations that management acknowledges its responsibility for the electronic presentation of the audited financial report and the auditor’s report.

Under ASA 580, paragraph 13, the auditor may determine that written representations are necessary to support other audit evidence relevant to the financial report. Accordingly, the auditor may request written representations that:

1. the electronic version of the audited financial report and auditor’s report published on the website are identical to the final signed version of the audited financial report and auditor’s report;
2. management has in place a process to clearly differentiate between audited and unaudited information on the entity’s website and understands the risk of potential misrepresentation;
3. management has assessed the controls over audited financial information and the auditor’s report and is satisfied that procedures in place are adequate to ensure the integrity of the information provided;
4. where the auditor’s report on the full financial report is provided on the website, the financial report is also provided in full; and
5. where applicable, management has complied with the requirements of the Act with respect to the electronic presentation of the audited financial reports.

Appendix 2 contains an example of an additional paragraph that may be included in a written representation letter.

The auditor is not required to provide a separate auditor’s report for the electronic presentation of an audited financial report on an entity’s website.

The auditor may consider including an “Other Matter Paragraph” in the auditor’s report which advises readers that the report refers only to the statements named in the auditor’s report and does not provide an opinion on any other information which may have been hyperlinked to/from the audited financial report. See ASA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report.

Appendix 3 contains an example of an “Other Matter Paragraph” that may be included in an auditor’s report.

If the auditor’s report is used without the auditor’s consent, and the auditor has concerns about the electronic presentation of the audited financial report or the auditor’s report and appropriate action is not taken by management, the auditor seeks legal advice as necessary. The auditor also considers whether it would be appropriate to resign, where possible under applicable law or regulation.

The Auditing Standards require particular attention when the audited financial report and auditor’s report are published with other information - which is common practice on internet websites.

Under ASA 700 Forming an Opinion and Reporting on a Financial Report, when unaudited supplementary information that is not required by the applicable financial reporting framework is presented with the audited financial report, the auditor is required to evaluate whether such supplementary information is clearly differentiated from the audited financial report

1. If such supplementary information is not clearly differentiated from the audited financial report, the auditor asks management to change how the unaudited supplementary information is presented.
2. If management refuses to do so, the auditor explains in the auditor’s report that such supplementary information has not been audited. Such explanation is contained in an “Other Matter Paragraph” under ASA 706.
3. Techniques that may be used to differentiate material within a website include:
   • Icons or watermarks.
   • Colour borders.
   • Labels/banners such as “annual report” or “audited financial statements”.

The appropriate mode of differentiation between audited and unaudited information will be dependent on the electronic format selected, and the nature of other information published on the website.

The auditor remains alert to unaudited supplementary information that is not required by the applicable financial reporting framework, but is nevertheless an integral part of the financial report because it cannot be clearly differentiated from the audited financial report due to its nature and how it is presented. Such information is covered by the auditor’s opinion. See ASA 700, paragraph 47.

Under ASA 720 The Auditor's Responsibilities Relating to Other Information in Documents Containing an Audited Financial Report, the auditor establishes that the auditor’s report is not inappropriately associated with other information. The auditor’s objective is to respond appropriately when documents containing an audited financial report and the auditor’s report thereon include other information that could undermine the credibility of that financial report and the auditor’s report.

An important requirement of ASA 720 is for the auditor to make arrangements with management to obtain the other information prior to the date of the auditor’s report.

Where a material inconsistency is identified in the other information and management refuse to revise that information, the auditor is required to include in the auditor’s report an “Other Matter Paragraph” describing the material inconsistency in accordance with ASA 706. See ASA 720, paragraph 10(a).