Document ID: chunk:federal_register_of_legislation:F2022C01208:reg:14:p24
Version: federal_register_of_legislation:F2022C01208
Segment Type: reg
Provision Reference: reg 14 (pt 24/57)
Character Range: 76087–79146

and amount of the misstatements, whether the misstatements originated in the preceding year or current year, and the potential effect of the misstatements on future interim or annual periods.

A34.         The auditor may designate an amount below which misstatements need not be aggregated, because the auditor expects that the aggregation of such amounts clearly would not have a material effect on the financial report.  In so doing, under paragraph 15, the auditor needs to consider the fact that the determination of materiality involves quantitative as well as qualitative considerations and that misstatements of a relatively small amount could nevertheless have a material effect on the financial report.

Written Representations

A35.         The auditor needs to endeavour to obtain additional representations as are appropriate to matters specific to the entity's business or industry. An illustrative representation letter is set out in Appendix 1.  (Ref: Para. 24)

Auditor's Responsibility for Other Information

A36.         An auditor conducting a review engagement under this auditing standard is not required to comply with ASA 720[*], however ASA 720 includes guidance which may be useful. ASA 720 requires the auditor to read the other information that accompanies the financial report to consider whether there is a material inconsistency with the financial report. If the auditor identifies a material inconsistency, the auditor needs to consider whether the financial report or the other information needs to be amended.  If an amendment is necessary in the financial report and those charged with governance refuse to make the amendment, the auditor needs to consider the implications for the auditor's review report.  If an amendment is necessary in the other information and those charged with governance refuse to make the amendment, the auditor may consider including an Other Information paragraph in the auditor's review report and describe the material misstatement. For example, those charged with governance may present alternative measures of earnings that more positively portray financial performance than the financial report, and such alternative measures are given excessive prominence, or are not clearly defined, or not clearly reconciled to the financial report such that they are confusing and potentially misleading.  (Ref: Para. 26)

A37.         For a review of a half-year financial report under the Corporations Act 2001 (Act), withholding the issuance of the auditor's review report and/or withdrawing from the review engagement are not options available under the Act. (Ref: Para. 30)

A38.         While reading the other information for the purpose of identifying material inconsistencies, an apparent material misstatement of fact may come to the auditor's attention (that is, information, not related to matters appearing in the financial report, that is incorrectly stated or presented).  When discussing the matter with the entity's management, ordinarily the auditor considers the validity of the other