Document ID: chunk:federal_register_of_legislation:F2016C00028:reg:26:p13
Version: federal_register_of_legislation:F2016C00028
Segment Type: reg
Provision Reference: reg 26 (pt 13/47)
Character Range: 43701–46799

that the entity or its operations may have undergone since the prior financial period, which may assist the auditor in gaining a sufficient understanding of the entity to identify and assess risks of material misstatement.

           * Those particular types of transactions and other events or account balances (and related disclosures) where the auditor experienced difficulty in performing the necessary audit procedures, for example due to their complexity.

A20.         The auditor is required to determine whether information obtained in prior periods remains relevant, if the auditor intends to use that information for the purposes of the current audit.  This is because changes in the control environment, for example, may affect the relevance of information obtained in the prior year.  To determine whether changes have occurred that may affect the relevance of such information, the auditor may make enquiries and perform other appropriate audit procedures, such as walk‑throughs of relevant systems.

Discussion among the Engagement Team (Ref: Para. 10)

A21.         The discussion among the engagement team about the susceptibility of the entity's financial report to material misstatement:

           * Provides an opportunity for more experienced engagement team members, including the engagement partner, to share their insights based on their knowledge of the entity.

           * Allows the engagement team members to exchange information about the business risks to which the entity is subject and about how and where the financial report might be susceptible to material misstatement due to fraud or error.

           * Assists the engagement team members to gain a better understanding of the potential for material misstatement of the financial report in the specific areas assigned to them, and to understand how the results of the audit procedures that they perform may affect other aspects of the audit including the decisions about the nature, timing, and extent of further audit procedures.

           * Provides a basis upon which engagement team members communicate and share new information obtained throughout the audit that may affect the assessment of risks of material misstatement or the audit procedures performed to address these risks.

    ASA 240 provides further requirements and guidance in relation to the discussion among the engagement team about the risks of fraud.[8]

A22.         As part of the discussion among the engagement team required by paragraph 10, consideration of the disclosure requirements of the applicable financial reporting framework assists in identifying early in the audit where there may be risks of material misstatement in relation to disclosures.  Examples of matters the engagement team may discuss include:

           * Changes in financial reporting requirements that may result in significant new or revised disclosures;

           * Changes in the entity's environment, financial condition or activities that may result in significant new or revised disclosures, for example, a significant business combination