Document ID: chunk:federal_register_of_legislation:F2022C01208:reg:14:p25
Version: federal_register_of_legislation:F2022C01208
Segment Type: reg
Provision Reference: reg 14 (pt 25/57)
Character Range: 78875–81912

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 information and management's responses to the auditor's enquiries, whether valid differences of judgement or opinion exist and whether to request management to consult with a qualified third party to resolve the apparent misstatement of fact.  If an amendment is necessary to correct a material misstatement of fact and management refuses to make the amendment, ordinarily the auditor considers taking further action as appropriate, such as notifying those charged with governance and, if necessary, obtaining legal advice, and considering the implications for the auditor's review report.  ASA 720[*] includes guidance which may be beneficial.  (Ref: Para. 27)

Communication

A39.         Communications with management and/or those charged with governance are made as soon as practicable, either orally or in writing.  The auditor's decision whether to communicate orally or in writing ordinarily is affected by factors such as the nature, sensitivity and significance of the matter to be communicated and the timing of the communications.  If the information is communicated orally, under paragraph 55, the auditor needs to document the communication.  (Ref: Para. 28 and 31)

A40.         The determination of which level of management may also be informed is affected by the likelihood of collusion or the involvement of a member of management.  Refer to ASA 250 for further guidance which may be helpful. (Ref: Para. 31)

A41.         Law or regulation may restrict the auditor's communication of certain matters with management or those charged with governance. Law or regulation may specifically prohibit a communication, or other action, that might prejudice an investigation by an appropriate authority into an actual, or suspected, illegal act, including alerting the entity, for example, when the auditor is required to report identified or suspected non-compliance with laws and regulation to an appropriate authority pursuant to anti-money laundering legislation. In these circumstances, the issues considered by the auditor may be complex and the auditor may consider it appropriate to obtain legal advice. ASA 250 includes guidance which may be helpful, including where there may be additional communication required.[7] (Ref: Para. 31)

A42.         As a result of performing a review of a financial report, the auditor may become aware of matters that in the opinion of the auditor are both important and relevant to those charged with governance in overseeing the financial reporting and disclosure process.  (Ref: Para. 32)

Reporting the Nature, Extent and Results of the Review of a Financial Report (Ref: Para. 33-34)

A43.         Appendix 4 contains illustrations of the auditor's review reports incorporating the elements in paragraphs 33