Document ID: chunk:federal_register_of_legislation:F2022C01208:reg:14:p18
Version: federal_register_of_legislation:F2022C01208
Segment Type: reg
Provision Reference: reg 14 (pt 18/57)
Character Range: 58660–61894

its environment, the applicable financial reporting framework, and the entity's system of internal control, to determine the enquiries to be made and the analytical and other review procedures to be applied, and to identify the particular events, transactions or assertions to which enquiries may be directed or analytical or other review procedures applied.  (Ref: Para. 13)

A11.         The procedures performed by the auditor to update the understanding of the entity and its environment, the applicable financial reporting framework, and the entity's system of internal control, ordinarily include the following:

(a)                reading the documentation, to the extent necessary, of the preceding year's audit, reviews of prior period(s) of the current year, and corresponding period(s) of the prior year, to enable the auditor to identify matters that may affect the current‑period financial report;

(b)                considering any significant risks, including the risk of management override of controls, that were identified in the audit of the prior year's financial report;

(c)                reading the most recent annual and comparable prior period financial report;

(d)                considering materiality with reference to the applicable financial reporting framework as it relates to the financial report, to assist in determining the nature and extent of the procedures to be performed and evaluating the effect of misstatements;

(e)                considering the nature of any corrected material misstatements and any identified uncorrected immaterial misstatements in the prior year's financial report;

(f)                 considering significant financial accounting and reporting matters that may be of continuing significance, such as material weaknesses in internal control;

(g)                considering the results of any audit procedures performed with respect to the current year's financial report;

(h)                considering the results of any internal audit performed and the subsequent actions taken by management;

(i)                 enquiring of management about the results of management's assessment of the risk that the financial report may be materially misstated as a result of fraud;

(j)                 enquiring of management and of other appropriate individuals within the entity about the effect of changes in the entity's business activities;

(k)                enquiring of management about any significant changes in internal control and the potential effect of any such changes on the preparation of the financial report; and

(l)                 enquiring of management of the process by which the financial report has been prepared and the reliability of the underlying accounting records to which the financial report is agreed or reconciled.  (Ref: Para. 13)

A12.         The auditor needs to determine the nature of the review procedures, if any, to be performed for components and, where applicable, communicate these matters to other auditors involved in the review. Factors considered ordinarily include the materiality of, and risk of misstatement in, the financial information of the component, and the auditor's understanding of the extent to which