Document ID: chunk:federal_register_of_legislation:F2023C01124:reg:17:p36
Version: federal_register_of_legislation:F2023C01124
Segment Type: reg
Provision Reference: reg 17 (pt 36/41)
Character Range: 113149–116382

information.

      * Performing a detailed review of the entity's month‑end or year‑end adjusting entries and investigating any that appear unusual as to nature or amount.

      * For significant and unusual transactions, particularly those occurring at or near year‑end, investigating the possibility of related parties and the sources of financial resources supporting the transactions.

      * Performing substantive analytical procedures using disaggregated data.  For example, comparing sales and cost of sales by location, line of business or month to expectations developed by the auditor.

      * Conducting interviews of personnel involved in areas where a risk of material misstatement due to fraud has been identified, to obtain their insights about the risk and whether, or how, controls address the risk.

      * When other independent auditors are auditing the financial report of one or more subsidiaries, divisions or branches, discussing with them the extent of work necessary to be performed to address the assessed risk of material misstatement due to fraud resulting from transactions and activities among these components.

      * If the work of an expert becomes particularly significant with respect to a financial statement item for which the assessed risk of material misstatement due to fraud is high, performing additional procedures relating to some or all of the expert's assumptions, methods or findings to determine that the findings are not unreasonable, or engaging another expert for that purpose.

      * Performing audit procedures to analyse selected opening balance sheet accounts of the previously audited financial report to assess how certain issues involving accounting estimates and judgements, for example, an allowance for sales returns, were resolved with the benefit of hindsight.

      * Performing procedures on account or other reconciliations prepared by the entity, including considering reconciliations performed at interim periods.

      * Performing computer‑assisted techniques, such as data mining to test for anomalies in a population.

      * Testing the integrity of computer‑produced records and transactions.

      * Seeking additional audit evidence from sources outside of the entity being audited.

Specific Responses—Misstatement Resulting from Fraudulent Financial Reporting

Examples of responses to the auditor's assessment of the risks of material misstatement due to fraudulent financial reporting are as follows:

Revenue Recognition

      * Performing substantive analytical procedures relating to revenue using disaggregated data, for example, comparing revenue reported by month and by product line or business segment during the current reporting period with comparable prior periods.  Computer‑assisted audit techniques may be useful in identifying unusual or unexpected revenue relationships or transactions.

      * Confirming with customers certain relevant contract terms and the absence of side agreements, because the appropriate accounting often is influenced by such terms or agreements and basis for rebates or the period to which they relate are often poorly documented.  For example, acceptance criteria, delivery and payment terms,