Document ID: chunk:federal_register_of_legislation:F2023C01124:reg:17:p27
Version: federal_register_of_legislation:F2023C01124
Segment Type: reg
Provision Reference: reg 17 (pt 27/41)
Character Range: 86906–89976

significant if it involves senior management.  In such circumstances, the reliability of evidence previously obtained may be called into question, since there may be doubts about the completeness and truthfulness of representations made and about the genuineness of accounting records and documentation.  There may also be a possibility of collusion involving employees, management or third parties.

A54.         ASA 450[25] and ASA 700[26] establish requirements and provide guidance on the evaluation and disposition of misstatements and the effect on the auditor's opinion in the auditor's report.

Auditor Unable to Continue the Engagement (Ref: Para. 39)

A55.         Examples of exceptional circumstances that may arise and that may bring into question the auditor's ability to continue performing the audit include:

           * The entity does not take the appropriate action regarding fraud that the auditor considers necessary in the circumstances, even where the fraud is not material to the financial report;

           * The auditor's consideration of the risks of material misstatement due to fraud and the results of audit tests indicate a significant risk of material and pervasive fraud; or

           * The auditor has significant concern about the competence or integrity of management or those charged with governance.

A56.         Because of the variety of the circumstances that may arise, it is not possible to describe definitively when withdrawal from an engagement is appropriate.  Factors that affect the auditor's conclusion include the implications of the involvement of a member of management or of those charged with governance (which may affect the reliability of management representations) and the effects on the auditor of a continuing association with the entity.

A57.         The auditor has professional and legal responsibilities in such circumstances and these responsibilities may vary according to circumstances.  In some circumstances, for example, the auditor may be entitled to, or required to, make a statement or report to the person or persons who made the audit appointment or, in some cases, to regulatory authorities.  Given the exceptional nature of the circumstances and the need to consider the legal requirements, the auditor may consider it appropriate to seek legal advice when deciding whether to withdraw from an engagement and in determining an appropriate course of action, including the possibility of reporting to shareholders, regulators or others.[27]

         Aus A57.1 For an audit engagement under the Corporations Act 2001 (the Act), the possibility of withdrawing from the engagement or resigning from the appointment as an auditor can only be made in accordance with the provisions of the Act, including in certain circumstances, obtaining consent to resign from the Australian Securities and Investments Commission (ASIC).

Considerations Specific to Public Sector Entities

A58.         In many cases in the public sector, the option of withdrawing from the engagement may not be available