Document ID: chunk:federal_register_of_legislation:F2023C00337:reg:1:p5
Version: federal_register_of_legislation:F2023C00337
Segment Type: reg
Provision Reference: reg 1 (pt 5/23)
Character Range: 20875–24080

shall:

(a)                Withdraw from the audit engagement where possible under applicable law or regulation; and

(b)                Determine whether there is any obligation, either contractual or otherwise, to report the circumstances to other parties, such as those charged with governance, owners or regulators.

Additional Considerations in Engagement Acceptance

Financial Reporting Standards Supplemented by Law or Regulation

18.               If financial reporting standards established by an authorised or recognised standards setting organisation are supplemented by law or regulation, the auditor shall determine whether there are any conflicts between the financial reporting standards and the additional requirements.  If such conflicts exist, the auditor shall discuss with management the nature of the additional requirements and shall agree whether:

(a)                The additional requirements can be met through additional disclosures in the financial report; or

(b)                The description of the applicable financial reporting framework in the financial report can be amended accordingly.

    If neither of the above actions is possible, the auditor shall determine whether it will be necessary to modify the auditor's opinion in accordance with ASA 705.[3]  (Ref: Para. A36)

Financial Reporting Framework Prescribed by Law or Regulation—Other Matters Affecting Acceptance

19.               If the auditor has determined that the financial reporting framework prescribed by law or regulation would be unacceptable but for the fact that it is prescribed by law or regulation, the auditor shall accept the audit engagement only if the following conditions are present: (Ref: Para. A37)

(a)                Management agrees to provide additional disclosures in the financial report required to avoid the financial report being misleading; and

(b)                It is recognised in the terms of the audit engagement that:

(i)                 The auditor's report on the financial report will incorporate an Emphasis of Matter paragraph, drawing users' attention to the additional disclosures, in accordance with ASA 706;[4] and

(ii)               Unless the auditor is required by law or regulation to express the auditor's opinion on the financial report by using the phrases "present fairly, in all material respects," or "give a true and fair view" in accordance with the applicable financial reporting framework, the auditor's opinion on the financial report will not include such phrases.

20.               If the conditions outlined in paragraph 19 of this Auditing Standard are not present and the auditor is required by law or regulation to undertake the audit engagement, the auditor shall:

(a)                Evaluate the effect of the misleading nature of the financial report on the auditor's report; and

(b)                Include appropriate reference to this matter in the terms of the audit engagement.

Auditor's Report Prescribed by Law or Regulation

21.               In some cases, law or regulation of the relevant jurisdiction prescribes the layout or wording of the auditor's report in a form or in terms that are significantly different