Document ID: chunk:federal_register_of_legislation:F2017C00907:reg:15:p5
Version: federal_register_of_legislation:F2017C00907
Segment Type: reg
Provision Reference: reg 15 (pt 5/12)
Character Range: 20699–23945

When there is any uncertainty about whether one or more items are clearly trivial, the misstatement is considered not to be clearly trivial.

Misstatements in Individual Statements

A3.             The auditor may designate an amount below which misstatements of amounts in the individual statements would be clearly trivial, and would not need to be accumulated because the auditor expects that the accumulation of such amounts clearly would not have a material effect on the financial report.  However, misstatements of amounts that are above the designated amount are accumulated as required by paragraph 5 of this Auditing Standard.  In addition, misstatements relating to amounts may not be clearly trivial when judged on criteria of nature or circumstances, and, if not, are accumulated as required by paragraph 5 of this Auditing Standard.

Misstatements in Disclosures

A4.             Misstatements in disclosures may also be clearly trivial whether taken individually or in aggregate, and whether judged by any criteria of size, nature or circumstances.  Misstatements in disclosures that are not clearly trivial are also accumulated to assist the auditor in evaluating the effect of such misstatements on the relevant disclosures and the financial report as a whole.  Paragraph A14 of this Auditing Standard provides examples of where misstatements in qualitative disclosures may be material.

Accumulation of Misstatements

A5.             Misstatements by nature or circumstances, accumulated as described in paragraphs A3‑A4, cannot be added together as is possible in the case of misstatements of amounts.  Nevertheless, the auditor is required by paragraph 11 of this Auditing Standard to evaluate those misstatements individually and in aggregate (i.e., collectively with other misstatements) to determine whether they are material.

A6.             To assist the auditor in evaluating the effect of misstatements accumulated during the audit and in communicating misstatements to management and those charged with governance, it may be useful to distinguish between factual misstatements, judgemental misstatements and projected misstatements.

    Misstatements in Disclosures

           * Factual misstatements are misstatements about which there is no doubt.

           * Judgemental misstatements are differences arising from the judgements of management including those concerning recognition, measurement, presentation and disclosure in the financial report (including the selection or application of accounting policies) that the auditor considers unreasonable or inappropriate.

           * Projected misstatements are the auditor's best estimate of misstatements in populations, involving the projection of misstatements identified in audit samples to the entire populations from which the samples were drawn.  Guidance on the determination of projected misstatements and evaluation of the results is set out in ASA 530.[9]

Consideration of Identified Misstatements as the Audit Progresses (Ref: Para. 6‑7)

A7.             A misstatement may not be an isolated occurrence.  Evidence that other misstatements may exist include, for example, where the auditor identifies that a misstatement arose from a breakdown in