ISA (UK) 720 requires the auditor to read everything published in the annual report alongside the audited accounts, such as the strategic report and directors’ report, and consider whether it is materially inconsistent with the accounts or with what the auditor learned during the audit. The audit opinion does not cover this other information, but UK company law adds a separate statement on whether the strategic and directors’ reports are consistent with the accounts, comply with the law and contain material misstatements.

What counts as other information?

Paragraph 12 of ISA (UK) 720 (Revised November 2019), updated September 2025, defines other information as financial or non financial information, other than the financial statements and the auditor’s report, included in the entity’s annual report. In the UK the annual report includes at least the statutory other information, meaning reports the auditor must report on publicly under law, plus any documents incorporated by cross reference or sent to shareholders with them. For a company this typically means the strategic report, the directors’ report, a chair’s statement and any governance or sustainability reporting in the same document.

Paragraph 7 excludes preliminary announcements and securities offering documents such as prospectuses. A company entitled to prepare accounts under the small companies regime is exempt from preparing a strategic report under section 414B of the Companies Act 2006, so for many small audited companies the main statutory other information is the directors’ report.

Is the strategic report audited?

No. Paragraph 2 says the auditor’s opinion on the financial statements does not cover the other information, and the standard does not require the auditor to obtain evidence beyond what the opinion needs. Paragraph 8 says the work is not an assurance engagement on the other information, apart from the statutory reporting duties.

Those statutory duties come from section 496 of the Companies Act 2006. In the report on the annual accounts the auditor must state whether, based on the audit work, the information in the strategic report and directors’ report is consistent with the accounts and whether those reports have been prepared in accordance with applicable legal requirements. The auditor must also state whether, in light of their knowledge and understanding of the company obtained in the audit, they have identified material misstatements in those reports, and if so indicate the nature of each. Section 497A adds similar statements where a company prepares a separate corporate governance statement.

What does the auditor actually do with the annual report?

  • Understand the requirements. Paragraph 12-1 requires an understanding of the legal and regulatory requirements for the statutory other information and how the entity complies.
  • Get the documents. Paragraph 13 requires the auditor to agree with management which documents form the annual report, arrange to receive the final versions, ideally before signing, and obtain a written representation where some will only be available later.
  • Compare with the accounts. Paragraph 14(a) requires the auditor to compare selected amounts and items intended to match, summarise or expand on the accounts.
  • Compare with audit knowledge. Paragraph 14(b) requires consideration of inconsistencies with what the auditor learned in the audit, such as a strategic report describing a strong order book when the going concern work found the opposite.
  • Check the legal content. Paragraph 14-1 requires consideration of whether the statutory other information appears materially misstated against the applicable legal requirements, for example a missing disclosure the law requires.
  • Stay alert. Paragraph 15 requires the auditor to remain alert for misstatements in other information unrelated to the accounts or the audit.

Paragraph 25 requires the audit file to include the procedures performed and the final version of the other information that was read.

What happens if something is wrong?

Paragraph 16 requires the auditor to discuss an apparent material inconsistency with management and, if needed, perform other procedures to conclude whether the other information is misstated, the accounts are misstated, or the auditor’s own understanding needs updating. If the accounts are wrong, paragraph 20 sends the auditor back to the other ISAs (UK).

If the other information is wrong, paragraph 17 requires the auditor to ask management to correct it and, if management refuses, to take it to those charged with governance. Under paragraph 18, if it is still uncorrected before the report is signed, the auditor must take appropriate action, either reflecting it in the auditor’s report or withdrawing where the law allows. Paragraph 19 covers misstatements found after signing, where the auditor must seek to have the issue brought to users’ attention, considering their legal rights and obligations.

What does the auditor’s report say about other information?

Paragraph 21 says that in the UK the auditor’s report must always include a separate section headed Other Information, or a similar heading, when reporting on it. Under paragraph 22 that section states that management is responsible for the other information, identifies it, states that the opinion does not cover it, describes the auditor’s responsibilities and either says the auditor has nothing to report or describes an uncorrected material misstatement. Paragraph 22-1 adds the description and conclusion on statutory other information required by law. Footnote 2b refers to ISA (UK) 700, under which the auditor must not sign the report before all the other information has been approved by those charged with governance.

For companies reporting against the UK Corporate Governance Code, paragraphs 22-2 and 22-3 require a Corporate Governance Statement section with conclusions on whether specified statements, such as the going concern and viability statements and the fair, balanced and understandable statement, are materially consistent with the accounts and the auditor’s knowledge. How this sits alongside the opinion is explained in types of audit opinion.

What changes for periods from 15 December 2026?

On 24 June 2026 the FRC published revised versions of ISA (UK) 700, 701 and 720, aiming for shorter, clearer auditor’s reports. ISA (UK) 720 (Revised May 2026) is effective for audits of periods commencing on or after 15 December 2026, with early adoption permitted. Visible changes include:

  • references to listed entities in the reporting paragraphs become references to publicly traded entities;
  • the separate defined term statutory other information is dropped, and paragraph 14-1 now asks whether the other information appears materially misstated against any legal and regulatory requirements that apply to it;
  • paragraph 12-1 requires the auditor, to the extent necessary, to understand whether such requirements exist and the entity’s process for preparing the other information;
  • paragraph 23-1 allows the description of the auditor’s responsibilities to sit in the body of the report, in an appendix, or by reference to a description on the Competent Authority’s website.

The section 496 statements continue: paragraph A58-5 of the revised standard still describes them.

How might this look in practice?

Illustration only. A medium sized manufacturer’s draft strategic report says revenue grew by 12 percent. The audited accounts show revenue up from 10 million pounds to 10.8 million pounds, an increase of 8 percent. The auditor raises the inconsistency, and the finance director explains the 12 percent figure excluded a discontinued product line without saying so. The board amends the wording to make the basis clear. The directors’ report also omits a disclosure the law requires, which is added. With both corrected, the Other Information section says the auditor has nothing to report and the section 496 statements are unqualified.

What are the common mistakes?

  • Signing the auditor’s report before the strategic and directors’ reports are final and approved.
  • Comparing figures but ignoring narrative that contradicts audit findings, such as statements about liquidity, covenants or going concern.
  • Assuming climate related disclosures in the annual report fall outside the auditor’s reading because they are not audited.
  • Directors treating the auditor’s nothing to report statement as an audit opinion on the narrative.
  • Failing to keep the final version of the annual report on file.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.