Document ID: chunk:federal_register_of_legislation:F2023C01125:body:0:p9
Version: federal_register_of_legislation:F2023C01125
Segment Type: other
Provision Reference: 
Character Range: 24350–27563

may not be acted upon or is unsure as to the person to whom to report, the auditor shall consider the need to obtain legal advice.

Potential Implications of Identified or Suspected Non‑Compliance for the Auditor's Report (Ref: Para.  A26–A27)

    26.               If the auditor concludes that the identified or suspected non‑compliance has a material effect on the financial report, and has not been adequately reflected in the financial report, the auditor shall, in accordance with ASA 705, express a qualified opinion or an adverse opinion on the financial report.[6]

    27.               If the auditor is precluded by management or those charged with governance from obtaining sufficient appropriate audit evidence to evaluate whether non‑compliance that may be material to the financial report has, or is likely to have, occurred, the auditor shall express a qualified opinion or disclaim an opinion on the financial report on the basis of a limitation on the scope of the audit in accordance with ASA 705.[7]

    28.               If the auditor is unable to determine whether non‑compliance has occurred because of limitations imposed by the circumstances rather than by management or those charged with governance, the auditor shall evaluate the effect on the auditor's opinion in accordance with ASA 705.

Reporting Identified or Suspected Non‑Compliance to an Appropriate Authority outside the Entity

    29.               If the auditor has identified or suspects non‑compliance with laws and regulations, the auditor shall determine whether law, regulation or relevant ethical requirements: (Ref: Para. A28–A34)

         (a)                Require the auditor to report to an appropriate authority outside the entity.

         (b)                Establish responsibilities under which reporting to an appropriate authority outside the entity may be appropriate in the circumstances.

Documentation

    30.               The auditor shall include in the audit documentation[8] identified or suspected non‑compliance with laws and regulations and: (Ref: Para. A35–A36)

         (a)                The audit procedures performed, the significant professional judgements made and the conclusions reached thereon; and

(b)                The discussions of significant matters related to the non‑compliance with management, those charged with governance and others, including how management and, where applicable, those charged with governance have responded to the matter.

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Application and Other Explanatory Material

Responsibility for Compliance with Laws and Regulations (Ref: Para. 3–9)

A1.             It is the responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with laws and regulations.  Laws and regulations may affect an entity's financial report in different ways: for example, most directly, they may affect specific disclosures required of the entity in the financial report or they may prescribe the applicable financial reporting framework.  They may also establish certain legal rights and obligations of the entity, some of which will be recognised in the entity's