Document ID: chunk:federal_register_of_legislation:F2023C01125:body:0:p8
Version: federal_register_of_legislation:F2023C01125
Segment Type: other
Provision Reference: 
Character Range: 21371–24593

out in paragraphs 13–17.

Audit Procedures When Non‑Compliance Is Identified or Suspected

    19.               If the auditor becomes aware of information concerning an instance of non‑compliance or suspected non‑compliance with laws and regulations, the auditor shall obtain: (Ref: Para. A17–A18)

         (a)                An understanding of the nature of the act and the circumstances in which it has occurred; and

         (b)                Further information to evaluate the possible effect on the financial report.  (Ref: Para. A19)

    20.               If the auditor suspects there may be non‑compliance, the auditor shall discuss the matter, unless prohibited by law or regulation, with the appropriate level of management and, where appropriate, those charged with governance.  If management or, as appropriate, those charged with governance, do not provide sufficient information that supports that the entity is in compliance with laws and regulations and, in the auditor's judgement, the effect of the suspected non‑compliance may be material to the financial report, the auditor shall consider the need to obtain legal advice.  (Ref: Para. A20–A22)

    21.               If sufficient information about suspected non‑compliance cannot be obtained, the auditor shall evaluate the effect of the lack of sufficient appropriate audit evidence on the auditor's opinion.

    22.               The auditor shall evaluate the implications of identified or suspected non‑compliance in relation to other aspects of the audit, including the auditor's risk assessment and the reliability of written representations, and take appropriate action.  (Ref: Para. A23–A25)

Communicating and Reporting Identified or Suspected Non‑Compliance

Communicating Identified or Suspected Non‑Compliance with Those Charged with Governance

    23.               Unless all of those charged with governance are involved in management of the entity, and therefore are aware of matters involving identified or suspected non‑compliance already communicated by the auditor,[5] the auditor shall communicate, unless prohibited by law or regulation, with those charged with governance, matters involving non‑compliance with laws and regulations that come to the auditor's attention during the course of the audit, other than when the matters are clearly inconsequential.

    24.               If, in the auditor's judgement, the non‑compliance referred to in paragraph 23 is believed to be intentional and material, the auditor shall communicate the matter with those charged with governance as soon as practicable.

    25.               If the auditor suspects that management or those charged with governance are involved in non‑compliance, the auditor shall communicate the matter to the next higher level of authority at the entity, if it exists, such as an audit committee or supervisory board.  Where no higher authority exists, or if the auditor believes that the communication may not be acted upon or is unsure as to the person to whom to report, the auditor shall consider the need to obtain legal advice.

Potential Implications of Identified or Suspected Non‑Compliance for the Auditor's Report (Ref: Para.  A26–A27)