Document ID: chunk:federal_register_of_legislation:F2023C01128:reg:17:p23
Version: federal_register_of_legislation:F2023C01128
Segment Type: reg
Provision Reference: reg 17 (pt 23/25)
Character Range: 71006–74231

of the timing and method of adoption of a change in accounting policy on the current and future earnings of the entity; and the timing of a change in accounting policies in relation to expected new accounting pronouncements.

      * The effect of significant accounting policies in controversial or emerging areas (or those unique to an industry, particularly when there is a lack of authoritative guidance or consensus).

      * The effect of the timing of transactions in relation to the period in which they are recorded.

Accounting Estimates and Related Disclosures

      * Appendix 2 of ASA 540 includes matters that the auditor may consider communicating with respect to significant qualitative aspects of the entity's accounting practices related to accounting estimates and related disclosures.

Financial Report Disclosures

      * The issues involved, and related judgements made, in formulating particularly sensitive financial report disclosures (e.g., disclosures related to revenue recognition, remuneration, going concern, subsequent events, and contingency issues).

      * The overall neutrality, consistency and clarity of the disclosures in the financial report.

Related Matters

      * The potential effect on the financial report of significant risks, exposures and uncertainties, such as pending litigation, that are disclosed in the financial report.

      * The extent to which the financial report is affected by significant transactions that are outside the normal course of business for the entity, or that otherwise appear to be unusual.  This communication may highlight:

              + The non‑recurring amounts recognised during the period.

              + The extent to which such transactions are separately disclosed in the financial report.

              + Whether such transactions appear to have been designed to achieve a particular accounting or tax treatment, or a particular legal or regulatory objective.

              + Whether the form of such transactions appears overly complex or where extensive advice regarding the structuring of the transaction has been taken.

              + Where management is placing more emphasis on the need for a particular accounting treatment than on the underlying economics of the transaction.

      * The factors affecting asset and liability carrying values, including the entity's basis for determining useful lives assigned to tangible and intangible assets.  The communication may explain how factors affecting carrying values were selected and how alternative selections would have affected the financial report.

      * The selective correction of misstatements, for example, correcting misstatements with the effect of increasing reported earnings, but not those that have the effect of decreasing reported earnings.

[*]  Early adoption, in conjunction with ASA 540 Auditing Accounting Estimates and Related Disclosures, permitted.
[#]  Early adoption, in conjunction with ASA 315 Identifying and Assessing the Risks of Material Misstatement, permitted.
[1] See ASA 265 Communicating Deficiencies in Internal Control to Those Charged with Governance and Management.
[2]  See ASA 230 Audit Documentation, paragraphs 8–11,